Reichwald Offers Viewpoint on Investors’ Lack of Demand in PPIP for the Reason Magazine
“Public Private Partnerships and the Free Will Problem”
Reason
July 7, 2009 - Manatt partner Harold P. Reichwald was quoted in the July 7 Reason Magazine Online article, “Public Private Partnerships and the Free Will Problem.” According to the article, the Treasury Department’s Public Private Investment Program (PPIP) has been diminished from its original conception as capital investment firms are not looking to buy distressed assets. The article explains that investors are too smart to overpay now for something they’ll be able to pick up cheaper in the future, when the FDIC is liquidating these assets on behalf of failed banks. The supply is present in these investment opportunities but it is the demand that is lacking. Reichwald, co-chair of Manatt’s Banking & Specialty Finance Practice Group, listed other disincentives to the PPIP for capital firms, including TARP-style interference, executive compensation limitations, and concerns that “the very fact that you make a profit by government assistance somehow puts you in bad boy category. I don’t think entrepreneurs want to feel like a whipping boy.”
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