China Prefers Toxic Assets to Fed's TALF Program

In a laugher, China Investment Corporation has boldly thrown its weight behind U.S. taxpayer-subsidized funds that focus on "toxic" mortgage-backed securities over the Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF).

The TALF program announced in 2008, issues asset backed securities collateralized with student, auto and credit card loans in a "AAA" packaging.

CIC perceives toxic, residential and potentially subprime properties as more stable than the Federal Reserve's program!

China's CIC Set to Invest In U.S. Mortgages

By George Chen, Asia Private Equity Correspondent

HONG KONG (Reuters) - China's $200 billion sovereign wealth fund, which lost big on its ill-timed 2007 Morgan Stanley and Blackstone bets, plans to invest up to $2 billion in U.S. mortgages as it eyes a property market rebound, two people with direct knowledge of the matter said Monday.

China Investment Corp plans to soon invest in U.S. taxpayer-subsidized investment funds that will acquire "toxic" mortgage-backed securities from the nation's banks. CIC believes these assets are a safer bet than buying into the U.S. Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF), the people with direct knowledge said.