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The largest hedge fund in the U.S. has declined to participate in the PPIP due to “flaws”. Ray Dalio, head of Bridgewate, in a note titled  “Why We Decided Against Buying in the PPIP and Why We Doubt That It Will be Broadly Subscribed”, said:

“When the program was first announced, we were originally interested.  However, as things now stand, very little leverage is actually being offered via the ‘Legacy Securities Program.”

Dalio sounds very skeptical of the plan and believes it will be ripe with conflict and potential collusion.  I still believe the M2M is much bigger news.  The fact that banks can keep these non-performing assets on their books at mark to make believe levels will result in no incentive to sell the assets.  Bridgewater clearly understands that they’re unlikely to get the assets at the cheap prices in which they would be desirable.  Combined with the political magnifying glass that comes with the plan and its a no go for Bridgewater.

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