US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under Treasury's $1,000bn plan to revive the financial system.
The moves could be controversial because a key goal of the government's public-private partnerships, which provide generous loans to investors, is to help banks sell, rather than acquire, troubled securities and loans.
Participating in the plan as a buyer could be particularly complicated for Citi, which has suffered billions of dollars in writedowns on mortgage-backed assets and is about to cede a 36 per cent stake to the government as part of its latest bail-out.
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