Treasury OKs more firms for toxic asset program

Two more large investment companies have together raised enough money to join with the government in buying toxic assets held by banks so they can resume more normal lending to support an economic recovery.

The Treasury Department said Tuesday that New York-based Angelo, Gordon & Co. LP and Norwalk, Conn.-based GE Capital Real Estate together raised more than the $500 million minimum needed to close investment funds.

The partnership joins four other firms, and the six have raised a total of $3.58 billion in private sector capital. Treasury will match that money and provide additional investment capital. The total purchasing power to buy up bad bank assets stands at $14.34 billion.

The five firms already approved to participate are: Alliance Bernstein LP and BlackRock Inc., both headquartered in New York, Boston-based Wellington Management Co., Atlanta-based Invesco Ltd. and Los Angeles-based The TCW Group Inc.

The effort, known as the Public-Private Investment Program, or PPIP, has been plagued by delays and some analysts wonder how much effect it will have. Others question if it puts government money at risk while benefiting wealthy private equity firms.

Treasury initially announced the program would buy as much as $1 trillion worth of bank assets. The program was scaled back several times as the financial sector stabilized and banks became reluctant to sell the assets at fire-sale prices.

But Treasury remains optimistic about the program and said announcements about the remaining three firms being approved to participate are expected soon.