Associated Press: WASHINGTON - The Obama administrations latest attempt to tackle the banking crisis and get loans flowing to families and businesses will create a new government entity, the Public-Private Investment Program, to help purchase as much as $1 trillion in toxic assets on banks books. The new effort, to be unveiled Monday, will be followed the next day with release of the administrations broad framework for overhauling the financial system to ensure that the current crisis the worst in seven decades is not repeated. A key part of that regulatory framework will give the government new resolution authority to take over troubled institutions that would pose a threat to the entire financial system if they failed. -------------------- from The New York Times: The three-pronged approach is perhaps the most central component of President Obamas plan to rescue the nations banking system from the money-losing assets weighing down bank balance sheets, crippling their ability to make new loans and deepening the recession. Industry analysts estimate that the nations banks are holding at least $2 trillion in troubled assets, mostly residential and commercial mortgages. The plan to be announced next week involves three separate approaches. In one, the Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money that those partnerships will need to buy up troubled assets that banks want to sell. In the second, the Treasury will hire four or five investment management firms, matching the private money that each of the firms puts up on a dollar-for-dollar basis with government money. In the third piece, the Treasury plans to expand lending through the Term Asset-Backed Securities Loan Facility, a joint venture with the Federal Reserve. The goal of the plan is to leverage the dwindling resources of the Treasury Departments bailout program with money from private investors to buy up as many of those toxic assets as possible and free the banks to resume more normal lending. -------------------- If somebody could explain to me in layman's terms how we're going to free up toxic assets so that banks will "resume more normal lending", I'd appreciate it. Also: if AIG and Citigroup and other government-owned entities eventually buy their way out of debt (when the economy stabilizes and banks "lend normally"), doesn't the government get back all the bailout money -- and eventually even turn a profit with interest on lent monies?