Treasury to name up to 9 managers for toxic-asset plan: source

NEW YORK (Reuters) - The Treasury Department is expected to name as many as nine fund managers to operate the long-awaited Public-Private Investment Program (PPIP) to cleanse banks of toxic assets, a person familiar with the plan said on Wednesday.

An announcement from Treasury could come as soon as Thursday, the person said, adding that the roster of firms is likely to include Allianz SE's Pacific Investment Management Co, or Pimco, BlackRock Inc, billionaire investor Wilbur Ross and private investor Angelo Gordon & Co.

A Treasury official could not immediately be reached for comment.

PPIP, which will use federal funds and private capital to buy banks' toxic assets, is a key part of the Obama administration's efforts to shore up the banking industry by cleansing banks' balance sheets and helping jump-start the lending and securitization necessary for a healthy economy.

Yet expectations about the overall toxic asset plan have been scaled back as banks have proven they can attract private capital without first cleansing balance sheets of a bulk of the troubled assets.

What is more, the source familiar with the government's plan said "the potency of the program has been diluted due to a lack of seller enthusiasm and caution on the part of potential buyers regarding regulation."

A recent rally in financial and bank stocks has allowed lenders to strengthen their balance sheets, thereby lessening the need to sell their toxic assets at firesale prices.

At the same time many investors are hesitant about partnering with the U.S. government for fear that it could later change the guidelines mid-stream.

(Reporting by Jennifer Ablan; Writing by Martinne Geller; Editing by Kim Coghill)