British Jan retail sales jump

Wanted: Private buyers for toxic assets. See Uncle Sam

To rid banks of their toxic loans, the Obama administration apparently wants to rely on purchases of those assets by private investors -- but with the government’s help.

Whether those investors will step up will depend on how favorable Uncle Sam makes the terms. And the better for them, conceivably, the worse for taxpayers.

Treasury Secretary Timothy Geithner is set Tuesday to announce the administration’s plans for Phase 2 of the financial system bailout.

The White House had been looking at creating a government-run "bad bank" to vacuum up toxic assets. But that apparently has been judged to be too expensive, at least in terms of initial outlays.

So a central element of the new plan reportedly calls for the government to offer some level of guarantee to hedge funds, private equity firms and other investors that agree to buy troubled assets from banks. For example, the Treasury could put a floor under the assets, ensuring that investors’ losses couldn’t exceed a set amount.

Purchases by private investors could help banks dispose of rotting loans that have long clogged their balance sheets, freeing them up to attract fresh capital, boost lending and spur the economy.

The administration's concept "is pretty attractive," said Steven Persky, chief executive of Dalton Investments, a West Los Angeles-based hedge fund firm that launched a fund focusing on distressed residential-mortgage securities last summer.

"If they’re doing things like guaranteeing a floor or providing very cheap non-recourse financing, that will be very effective in terms of [coaxing investors into] buying securities and starting to unfreeze the system," Persky said.

The success of the new plan will rest in part on whether on the government can persuade investors that it will stick with the idea, and won’t switch gears as it has with other bailout efforts since last fall.

"What’s necessary is a sense that the rules are going to be reasonably constant," said Tad Rivelle, chief investment officer at Metropolitan West Asset Management in L.A.

What’s unclear is how much this plan might ultimately cost the government, and therefore taxpayers.

A key risk is that the plan could help a relative handful of private investors pick up appealing assets at favorably cheap prices, while leaving the government with all the dreck "and taxpayers with all the losses," said Julia Whitehead, president of Whitehead Miller Advisors Inc.

-- Walter Hamilton

Photo credit: Reed Saxon/Associated Press

SEC Enforcer Leaves Agency After 14 Years

ABC News’ Matthew Jaffe reports: As the Securities and Exchange Commission continues to come under fire for failing to stop Bernie Madoff's alleged $50 billion Ponzi scheme, the leader of the agency's enforcement division is leaving her post to return to the private sector.

The SEC announced today that Linda Chatman Thomsen, the director of the Division of Enforcement, is leaving after 14 years at the agency.

The SEC has been hit by an avalanche of criticism in recent weeks from people who say it failed to adequately protect investors from Madoff's alleged Ponzi scheme. Just last week, a whistleblower and lawmakers alike blasted agency officials at a congressional hearing.

"You couldn't find your backside with two hands if the lights were on," Rep. Gary Ackerman, D-N.Y., told SEC officials.

But today, the new head of the SEC had nothing but praise for Thomsen, saying she led a historic period of SEC law enforcement and noting that, in the last two years, the agency has brought the second- and third-highest number of enforcement actions in its history.

"Linda's achievements have been nothing short of extraordinary, even heroic, in an era of unprecedented challenges in our securities markets," SEC chairwoman Mary Schapiro said in a statement. "Linda has distinguished herself in public service through her keen intellect, profound understanding of our securities laws, and relentless pursuit of wrongdoers. While Linda's wisdom, judgment, integrity, and humor will be sorely missed by all of her colleagues, the agency and the investors we serve will always be grateful for Linda's service."

Thomsen had been at the SEC since 1995. She called her time at the SEC "an extraordinary privilege."

"For nearly 14 years, I have been surrounded by smart, hardworking, creative, wonderful colleagues who have been devoted to public service, this agency, and its essential mission of investor protection," Thomsen said. "There is no higher honor than to serve the public and I am grateful to have had the opportunity to do so during my time at the commission."

British Jan retail sales jump

LONDONBRITAIN'S retailers saw a surprise rise in sales in January as higher food prices and strong demand during New Year sales helped drive the best performance since May, a retailing lobby group said on Tuesday.

In its monthly survey, the British Retail Consortium said like-for-like sales, which strip out new stores and space, increased by 1.1 per cent in January from the previous year. In December, they had fallen by 2.2 per cent.
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