On March 23, 2009, the Treasury Department announced a new Public-Private Investment Program (PPIP), a collaborative initiative among the Treasury Department, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and private investors to create $500 billion to $1 trillion in buying power for the purchase from financial institutions of “legacy” or “toxic” assets.  The idea of the PIPP is that purchasing such assets – primarily real-estate and corporate loans and securities backed by such loans – from financial institutions will fortify the institutions’ balance sheets, thus enabling them to raise new capital and make new loans, and thereby re-opening the spigots of credit in the U.S. economy.  The PPIP seeks to address the challenge of valuation of legacy assets largely by outsourcing valuation to private investment firms and allocating some of the risk of distressed asset purchases to such firms.  Broadly, under the terms of the PPIP, the government will act as a lender to private investors and, to a lesser degree, as a co-investor.  In theory, private investors will determine how best to allocate government capital, and will enjoy some of any upside, with limited downside.  In this sense, the government appears to have become, in effect, the world’s largest prime broker.  We explain the details of the PPIP in a long-form analysis.