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WHY OUR GOVERNMENT DOES NOT HELP MAIN STREET AMERICANS FACING FORECLOSURE-- THE TREASURY INVESTED IN TOXIC MORTGAGES AND MAKES A RETURN OF 36%

WHY OUR GOVERNMENT DOES NOT HELP MAIN STREET AMERICANS FACING FORECLOSURE-- THE TREASURY INVESTED IN TOXIC MORTGAGES AND MAKES A RETURN OF 36%

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Published by 83jjmack
A U.S. government program aimed at reviving the mortgage-backed securities market returned more than triple what stocks or bonds gained in the past year.
The eight funds created under the Public-Private Investment Program, or PPIP, reported net internal rates of return averaging 36 percent through Sept. 30, the Treasury Department said in a report this week. That compares with the 10 percent return for the Standard & Poor’s 500 Index and 8.2 percent for the BarCap U.S. Aggregate Total Return Index of bonds.
A U.S. government program aimed at reviving the mortgage-backed securities market returned more than triple what stocks or bonds gained in the past year.
The eight funds created under the Public-Private Investment Program, or PPIP, reported net internal rates of return averaging 36 percent through Sept. 30, the Treasury Department said in a report this week. That compares with the 10 percent return for the Standard & Poor’s 500 Index and 8.2 percent for the BarCap U.S. Aggregate Total Return Index of bonds.

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Published by: 83jjmack on Oct 26, 2010
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05/31/2011

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Treasury Gets 36% Return Buying Toxic Mortgages
 By Christopher Condon - Oct 22, 2010 1:19 PM PT Fri Oct 22 20:19:42 GMT 2010
The Public-Private Investment Program was introduced by Treasury Secretary Timothy Geithner as a means of helping banks weighed down by mortgage securities whose value had collapsedduring the credit crisis. Photographer: Joshua Roberts/BloombergPlay VideoOct. 22 (Bloomberg) -- Barry Knapp, chief U.S. equity strategist at Barclays Capital Inc., discussesthe outlook for corporate earnings and margin expansion. Knapp, speaking from New York, talkswith Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)A U.S. government program aimed at reviving the mortgage-backed securities market returnedmore than triple what stocks or bonds gained in the past year.The eight funds created under the Public-Private Investment Program, or PPIP, reported netinternal rates of return averaging 36 percent through Sept. 30, the Treasury Department said in areport this week. That compares with the 10 percent return for theStandard & Poor’s 500 Index and 8.2 percent for theBarCap U.S. Aggregate Total Return Indexof bonds.“The first year has been out of the ballpark,”Jeffrey S. Phlegar , who heads the PPIP fund run by New York-based money manager AllianceBernstein LP, said yesterday in a telephone interview.The Treasury is an equal equity partner in each of the funds and provided debt financing for the$29.4 billion program. The government has gotten $215 million of interest, dividend and other 
 
 payments, and the funds have more than $1.5 billion in unrealized gains. Under the wider TroubledAsset Relief Program, or TARP, the government has earned $25.2 billion on its investment of $309 billion in banks and insurers, an 8.2 percent return over two years, according to datacompiled by Bloomberg.“While the program is still in its early stages, we are certainly pleased with its performance for taxpayers thus far,” Treasury spokesman Mark Paustenbachsaid in an e-mailed statement. GE’s 52% GainThe PPIP fund managed by GE Capital Real Estate, a unit of Fairfield, Connecticut-based GeneralElectric Co., and New York- based Angelo Gordon & Co., had the best return at 52 percent, theTreasury said. Oaktree Capital Management LLC, based in Los Angeles, had the lowest return at19 percent.The 36 percent average isn’t asset weighted and represents only the return on equity investments.The government’s return on its contribution to PPIP is around 5.6 percent when including the debtfinancing it provided and considering only realized returns, saidLinus Wilson, a finance professor at the University of Louisiana, in Lafayette. Officials shouldn’t have allowed the funds to make$159 million in equity distributions based on paper profits, he also said.“This is irresponsible when taxpayers will be lending $14.7 billion of extremely low-interestloans” to the funds, Wilson said. “Dividends should not be paid until the private investors’ debt totaxpayers is paid in full.”The eight fund managers raised $7.4 billion from private investors, which was matched by theTreasury. Government debt financing totaled $14.7 billion.Invested CapitalThe figures reflect returns only on about $18.6 billion of invested capital. The funds have yet todraw the remaining money.“Returns are not a function of better fundamental data,” said Phlegar of AllianceBernstein. “It’slargely a function of compression in yield premiums,” he said, meaning buyers are willing toaccept a lower return in the current bond market, bringing prices up.

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