by Calculated Risk on 4/03/2009 10:42:00 AM

The Financial Times reports: Bailed-out banks eye toxic asset buys (ht Scot)

US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury’s $1,000bn (£680bn) plan to revive the financial system.

The plans proved controversial, with critics charging that the government’s public-private partnership - which provide generous loans to investors - are intended to help banks sell, rather than acquire, troubled securities and loans.
...
The government plan does not allow banks to buy their own assets, but there is no ban on the purchase of securities and loans sold by others.

“It’s an open programme designed to get markets going,” a Treasury official said. But he added: “It is between a bank and their supervisor whether they are healthy enough to acquire assets,” raising the possibility regulators may prevent weak banks from becoming buyers.

This is just a report, and it would appear to be inappropriate for any bank receiving TARP funds to buy "legacy assets" using the PPIP. My suggestion is to explicitly ban this activity to help build confidence in the PPIP.