Cohen's Ricciardi Proposes an Alternative to Paulson's Plan

September 29, 2008

As Congress battled over the terms of the Treasury bailout plan last week, Christopher Ricciardi, chief executive officer at Cohen & Co. and former managing director of global structured credit products at Merrill Lynch, launched an alternative proposal to the government's purchase strategy under the Troubled Asset Relief Plan (TARP) . Under the current government proposal, the Treasury would tap asset managers to purchase troubled assets directly from financial institutions' balance sheets. Ricciardi suggested a Federal Bond Insurance Corp. (FBIC) that would provide a fee-based government guaranty to triple-A-rated senior classes of securitizations backed by a variety of assets. The plan could also, on an optional basis, require that bond insurance from a double-A or triple-A rated monoline first be secured for the asset.

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