Related to the government’s bail-out program PPIP (pronounced “pee-pip”) or the Public-Private Investment Program is an investment vehicle that has been designed by the government to “bail out” the banks. This is the way it works – for each dollar that a fund manger receives from an investor the government will likewise contribute a dollar and lend one more.
As it now stands, without the PPIP in place, the banks won’t be able to provide loans commercially or privately in the future. The idea of PPIP is to offer mortgage-backed securities in the marketplace that can be used to rejuvenate lending. These bonds are remnants of securities that were frozen at the time the housing market crashed.
How can the little guy afford such an investment? The government is providing incentives by encouraging fund managers to offer mutual funds whose portfolios will include investments in PPIP assets. One mutual company, Black Rock, already offers a closed fund (or one with limited shares) along this line. Other companies plan to offer REITs or real estate investment trusts that will serve the same purpose.
Is it a good investment? Time will tell. But the government’s backing of this now risky investment seems to be indicative that the invesment will reap dividends down the road.