Officials Mulling U.S. Government Fund to Buy Unwanted Assets

By: • Thu, Sep 18 2008, 3:45 PM

The U.S. government may create a company to buy unwanted assets from the private sector in a move to free up balance sheets.

U.S. Treasury Secretary Henry Paulson is considering a government-owned corporation to restore liquidity to the financial system, news organizations are reporting.

Within minutes CNBC and Reuters independently reported that Paulson was considering such a plan. Treasuries sold off and equity markets, especially financials, surged on the reports.

The government-owned company would be designed to mirror the Resolution Trust Corporation, a company similar to the one the government created in the late 1980s to liquidate real-estate related assets.

By Adam Button and edited by Sarah Sussman
©CEP News Ltd. 2008