A senior fund manager from BlackRock Inc. (BLK) praised the latest details of the government's bank rescue program Monday and said the plan will help stabilize credit markets and offer investment opportunities.

Curtis Arledge, co-head of U.S. Fixed Income in BlackRock's Fixed Income Portfolio Management Group, said the company plans to apply as an investment manager with the Treasury's public-private investment program, which is aimed at helping banks remove toxic assets from their balance sheets. BlackRock rival Pacific Investment Management Co. has also said it plans to apply for an investment management slot.

If approved, BlackRock will go out and raise money from its large pool of clients, both institutional and retail, he said, adding that BlackRock is thinking about creating a mutual fund for retail investors and high net-worth individuals.

BlackRock will use the money raised to buy toxic assets and the Treasury Department will put in capital on an equity basis and also provide financing for the mutual fund, he said. He said BlackRock has recently raised over $3 million in a closed-end mutual fund to help funnel retail money into similar assets.

BlackRock will also tap into funding from the government's Term Asset-Backed Securities Loan Facility, or TALF, using it to buy assets, he said.

"We both hope to be hired as fund manager and we hope to use the funding program to improve returns for our clients," Arledge said in a telephone interview from his New York office.

BlackRock is the largest publicly-traded U.S. money manager with over $1.3 trillion worth of assets under management at the end of last year.

The Treasury's new plan will use up to $100 billion in funds from the Troubled Asset Relief Program, or TARP, and capital from private investors to generate $500 billion, which will be used to buy existing troubled assets, such as securities backed by commercial real estate or home loans, that are clogging up credit markets and bank balance sheets. The program potentially could expand to $1 trillion over time. Treasury said the program is a necessary step in healing the financial system and helping the economy recover.

"I think it is going to work and it is going to be a very good program," said Arledge.

Arledge noted that, for the most part many of these assets have seen their prices consistently decline because there wasn't enough capital on the buyers' side to offset the wave of selling.

The Treasury program will help encourage private investors to buy these assets, which have cheapened significantly, and such demand will help improve liquidity value.

"There will be large amount of capital that is going to come in to buy these assets which will change the equation," he said. "Giving investors capital to buy these assets is going to improve their pricing," he said.

With its solid funding base and support from the government, the Treasury plan will spur interest from a lot of investors who have waited for the opportunity to put money back to work, but have stayed on the sidelines amid fear of further price declines, he said.

While the government's program may create demand and prevent further declines in these distressed assets, Arledge noted that credit markets have yet to return to normal. The economy is still weak, and there are still credit concerns around many assets, he said.

There is also concern about the pricing of loans that banks may want to sell. Investors may bid at levels that are below the price at which the banks would want to sell the loans, he cautioned. But he is optimistic that a process will be put in place that will allow the intrinsic value of such distressed assets to emerge.

Another worry is the political climate, amid the ongoing public anger about bonus payments at American International Group (AIG) and banks that have received public funds. The House passed a bill last week that will raise a hefty tax on bonuses paid out by companies that receive government bailout funding. There are also increasing calls for tighter and broader oversight over not just bank holding firms but hedge funds and other financial institutions.

Market participants are concerned that such attacks may discourage private sector participation in the Treasury program, stymying its goal of getting credit flowing again.

Arledge said he has heard investment managers express such concerns. But he said policy makers understand that if they want private capital to move back into these markets, managers investing through these programs should not be subject to compensation limitations.

"In the big picture, the government is trying to restore economic growth," he said. "More capital is needed than the government can supply. We trust them. We also think they are very intelligent about how they think about this issue."

-By Min Zeng, Dow Jones Newswires; 201-938-2096; min.zeng@dowjones.com