Feb. 10--Economists and other experts expect Treasury Secretary Timothy Geithner to call today for a broad financial-recovery plan that includes ways of eliminating the bad debt that has been plaguing the balance sheets of the nation's major banks and stalling the flow of credit to consumers.

Geithner, among other steps, is expected to call on private investors, including hedge funds and possibly insurance firms, to buy the contaminated assets that have had a strangling impact on banks for months now.

But economists, business experts and some in the hedge fund industry said Geithner would have a hard sell in persuading investors to buy such assets, which are highly leveraged paper assets that have lost most, if not all, of their value, such as nonperforming mortgages.

"I think that will be very difficult in the short run," said David Wyss, an economist at Standard & Poor's Corp. "You would need patience, money, somebody who can sit on the money for a couple of years" before trying to sell it at a profit.

Geithner is also expected to call for a new round of bailout money for banks, broadening of a Federal Reserve program to expand consumer and small-business loans, and relief for homeowners from immediate foreclosure. Bailout money for the banks will come from the Troubled Asset Relief Program, authorized by Congress last fall. About $350 billion is left of the $700 billion authorized for the program. But a major aspect of Geithner's plan will be devoted to relieving banks of toxic assets.

Treasury officials would not comment yesterday on any aspect of the secretary's speech.

Andrew Schneider, managing partner and founder of HedgeCo Networks, consultants for hedge fund services in Manhattan, said he believed Geithner's plan would be beneficial for both banks and investors.

"The banks need to get rid of these things to clean up their balance sheets," Schneider said. "The buyers would be able to get these assets at such discounts that eventually they're going to make a nice profit from it."

Volkan Kurtas, chief executive of the hedge fund DFG Investment Advisors Inc., which manages $750 million in assets, said government guarantees would be important in any such deals.

"There are some decent assets," Kurtas said. "But nobody would touch the truly toxic assets."

Robert Hartwig, chief economist at the Insurance Information Institute, a trade group, said whether insurance firms would buy such assets might depend on their price. But, he added, "insurers maintain a very, very conservative asset portfolio."

Hugh Johnson, chief investment officer for Johnson Illington Advisors in Albany, said the toxic assets are complicated and often difficult to value. But, he added, "there certainly is a possibility that with correct pricing you would attract investors."

OVERHAULING THE PROGRAM

Treasury Secretary Timothy Geithner is expected to announce the new rules at 11 a.m. today, just a few hours before he's scheduled to testify before the Senate Banking Committee. The overhaul of the Troubled Asset Relief Program is expected to include:

New round of bailout money for banks

Broader powers for the Federal Reserve to expand a program of consumer and small business loans

Relief for homeowners from immediate foreclosure

Private-sector partnership to buy banks' bad assets

BANK SHARES

Banks in which the U.S. Treasury has the largest investment in stock, purchased with Troubled Asset Relief Program funds, in billions:

Bank of America $45

AIG $40

Wells Fargo $25

JPMorgan Chase $25

Citi-group $50

All others $115

SOURCE: US TREASURY

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