Mortgage Securities

In these uncertain times, you take your certitude where you find it. Platoons of academic economists and business commentators spent all weekend griping about the emerging details of the Obama administration's latest attempt to mount a bank bailout. Then Treasury Secretary Timothy F. Geithner unveiled the plan in detail Monday morning, and the stock market delivered a decisive thumbs-up, with the Dow Jones index rocketing nearly 500 points higher.

The Obama administration significantly downsized its program to buy toxic mortgage-backed securities while naming nine private investment companies to purchase the assets with the help of government money. The announcement formally launched a long-awaited initiative to help clean the balance sheets of financial institutions, allowing them to expand credit and help the economy to recover.

The Treasury Department's long-awaited attempt to deal with toxic mortgage securities cleared another hurdle as two of the nine fund managers selected to lead public-private partnerships to purchase the assets raised at least $500 million each. Invesco Ltd. and Los Angeles-based TCW Group Inc. have completed their initial fundraising from private investors, bringing in a total of $1.13 billion in capital commitments as part of the Public-Private Investment Program, the Treasury said Wednesday.

The Federal Reserve Bank of New York plans to get along without the help of bond giant Pimco or Goldman Sachs Group as the central bank continues its massive purchases of mortgage-backed securities. The New York Fed on Monday said it had "streamlined" its 8-month-old, $1.25-trillion program to buy mortgage bonds from four investment managers to two. Saying the changes were "not performance related," the bank said it was retaining Wellington Management Co. and BlackRock Inc. Newport Beach-based Pacific Investment Management Co. and Goldman Sachs Asset Management will exit.

The Federal Reserve said Friday that it would launch in June a long-expected program to help thaw the market for commercial real estate mortgages. The program is an expansion of the central bank's Term Asset-Backed Securities Loan Facility, or TALF, which was implemented in March to help stimulate consumer lending -- including credit cards, auto loans and other instruments -- in response to the country's credit crisis. The TALF also includes support for student loans and small-business loans.

Despite evidence that banks are regaining their health, the Treasury Department is pressing forward with a highly controversial program to help finance purchases of toxic assets that were at the heart of the nation's plunge into economic chaos last year. Treasury officials say the program is still needed because the assets -- complex securities on the balance sheets of banks that have virtually no market to trade in because they are so difficult to value -- still pose a threat.