For some insight on the status of the U.S. Treasury Department’s Public Private Investment Program (PPIP) see Robert Knakal’s blog post of July 10, 2009, at http://knakalstreetwise.wordpress.com/?sector=newyork . The PPIP program was to be a key element of the government’s Troubled Assets Loan Fund (TALF).
Knakal explains that the PPIP has lost momentum and is unlikely to emerge as a major factor in helping banks to clean some $1 trillion of troubled assets off their balance sheets. Apparently, PPIP is being scaled down to handle somewhere in the range of only $30 to $50 billion of these assets. Of course, anything with a “billion” after it is a big number. But in the context of a $1 trillion, $50 billion is not all that much.
Historically, regional banks have played a key role in supporting the economic development of regional economies. As a result, these banking institutions often have significant commericial real estate loan portfolios. Scaling back the PPIP could lead to see increasing failures of regional lenders, thereby delaying the economic recovery of the regions they serve.