Bank Superfund Wins Backers, Detractors

Euro banks, Wall Street biggies still on fence on bailout pool
By Jane Yager,  Newser Staff
Posted Oct 17, 2007 6:45 AM CDT
Bank Superfund Wins Backers, Detractors
A sign promotes the availability of a new home in the east Denver suburb of Aurora, Colo., on Sunday, Aug. 19, 2007. As the credit crisis has deepened in recent weeks and stock markets convulsed, spurring the Federal Reserve to swoop into the banking system with billions, a network of cash spigots around...   (Associated Press)

(Newser) – A planned superfund of $80 to $100 billion to alleviate the subprime lending crisis is gaining ground, though some potential investors remain skeptical. Yesterday, Wachovia Corp. came on board; Fidelity and Federated Investors have already agreed to chip in. The trio of banks leading the fund—Citigroup, JP Morgan Chase, and Bank of America—aim to invest less than half the target number, the Wall Street Journal reports.

Goldman Sachs, Lehman Brothers, Bear Stearns and Morgan Stanley have had exploratory talks but are still on the fence. The big  European banks  are hanging back, possibly  holding out for a great role or higher fees, the Journal speculates. Treasury supports the fund to buy up mortgage securities, but one detractor dubbed it "JP Morgan and Bank of America helping out Citibank." (Read more subprime crisis stories.)

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