Toxic asset plan may do better with more players

NEW YORK (Reuters) - The U.S. government's plan to help rid banks of their toxic assets might work better if more investment managers are involved, a hedge fund manager said on Wednesday.

"That plan, like any market, will benefit from more participants," Ivan Zinn, chief executive of Atalaya Capital Management said at the Reuters Private Equity and Hedge Funds Summit in New York.

Zinn spoke two days after the U.S. government laid out details about a new program that will address legacy loans being held by banks and legacy securities backed by mortgage-related debt that also is weighing on balance sheets.

The Treasury has said that it will approve up to five asset managers who have a track record of purchasing legacy assets to participate in buying these assets.

It also left open the door for more managers to participate, something Zinn said he expects may happen. America's two biggest fixed income managers, BlackRock (BLK.N) and Pimco, have already said they will participate. Some hedge funds also are considering it.

Under the current guidelines, the first five firms must have $10 billion in assets and they must submit their applications to the government by April 10.

Zinn said he expects that these guidelines will probably be loosened up. Some hedge funds that might want to participate have less than $10 billion in assets.

He also said there would likely be more interest if the application process is streamlined "so as to not overburden those administering it."

(Reporting by Svea Herbst-Bayliss; editing by Carol Bishopric)