The U.S. Treasury Department on Monday released updated guidelines on the public-private investment plan (PPIP), two weeks after first announcing the program in late March. “To better accommodate increased participation,” the Treasury said it had extended the application deadline to end-of-day April 24, with applicants being informed of preliminary qualification by May 15. The Treasury assured that the criteria will be viewed “holistically,” meaning a proposal will not be thrown out if it doesn’t meet all the criteria of the program. The theme of the Treasury’s press release, buried by the morning hype over the multi-agency crack-down on foreclosure rescue scams, was: expansion, expansion, expansion. The Treasury emphasized the potential for more proposal approvals, more business participation and more fund manager participation. The Treasury said it may select more than the original goal of five asset managers to invest along with the government’s public funds. The Treasury also said firms with less than $10 billion in managed assets may qualify. The Treasury encouraged small, minority-, veteran- and women-owned businesses to participate by partnering with fund managers as asset managers, equity partners or fund-raising partners. “Other ways to participate include providing such services as trade execution, valuation, and other important financial services,” Treasury officials said in the media statement. Treasury said it “will consider opening the program to fund managers that are not selected in the initial pre-qualification process,” reiterating the program’s potential for expansion. The Treasury also indicated the “legacy securities” program, although currently limited to non-agency CBS and RMBS, could be expanded “at a later date to include other asset classes.” Anyone out there? All the expansion efforts, however, may prove to be a moot point if interest so far has been low enough for the Treasury to seek “increased participation” by revamping the program’s guidelines. HousingWire‘s Linda Lowell wrote expansively on the PPIP and the way potential bank participation has been “vastly overestimated” due to issues raised on the investor side. As Lowell put it:

“…as the program is currently described, the banks would continue to service the loans they have sold. I just don’t get what investor -– aside from Fannie or Freddie, who can securitize loan purchases –- would want to buy a loan without the servicing. If there is money to be made in distressed loans, it requires properly servicing them…. I wouldn’t buy a loan from a distressed seller and trust the loan would be properly serviced. So why would an investor with the size, experience and ability to raise capital required by the program guidelines be more willing to do that?”

The world’s largest hedge fund manager, Bridgewater Associates, seems to have already made the decision not to participate in the plan. The $71 billion money-management firm reversed course last week, after earlier indicating it had planned to participate, according to a report in the New York Post. Bridgewater founder Ray Dalio blasted the program — at least the securities side of the program — as both a conflict of interest and one that offers very little leverage. “The managers are clearly in a conflict-of-interest position because they have both the government and the investors to please and because they will get their fees regardless of how these investments turn out,” Dalio is quoted by the Post as writing in his letter. Write to Diana Golobay at [email protected].