Dow Soars as Investors Back Bad Asset Plan

March 23, 2009— -- Bank stocks soared on Wall Street today as investors bet the Treasury Department's plan to help buy bad bank debt will put the nation's beleaguered banks on more solid financial footing.

The Dow Jones industrial average gained 500 points, marking the fifth biggest one-day point gain in history and signaling a strong endorsement of the Obama administration's move to help the nation's ailing banks take $1 trillion in bad assets off their books.

The rally came after Treasury Secretary Timothy Geithner announced the details of the Public-Private Investment Program, which seeks to entice private investors with government incentives to buy the so-called toxic assets from the banks' books -- an effort to thaw the credit freeze and make it easier for people to get loans.

While the Wall Street reaction can be read in part as a vote of confidence in the Obama administration's plan, experts cautioned not to see it as a silver bullet.

ABC News asked 27 of the nation's largest banks who have received TARP funds whether they will use the plan to sell their toxic mortgage assets. They were largely non-committal: 10 banks responded with no comment.

Wells Fargo said it is "premature to comment." Bank of America told ABC News it "supports the concept," but is "studying the details."

Morgan Stanley said it expects the plan to have a "positive impact on the credit markets."

The head of one potential buyer of the so-called toxic assets, the giant bond fund PIMCO, told ABC News that private investors could make substantial profits through the plan.

"I think an investor can earn double digits on these types of assets," said Bill Gross, co-CEO of PIMCO. "It's a win from the standpoint of the taxpayers that will be participating alongside."

But most potential buyers were more tentative. The Private Equity Council, a group that represents 13 of the largest private investment firms, said in a statement: "We look forward to exploring" whether the plan "can help us."