WASHINGTON (AP) – The Treasury Department on Thursday defended the viability of its $1 trillion plan to get soured mortgage investments off of banks’ books after JPMorgan Chase’s chief executive said the company won’t participate.

Some analysts said JPMorgan Chase & Co. CEO Jamie Dimon’s comments could spell trouble for the Treasury’s program, even before it gets off the ground.

Dimon said JPMorgan did not intend to participate in the Treasury’s Public-Private Investment Program, or PPIP, because it did not need to. The program is designed to support purchases of as much as $1 trillion in toxic assets that are currently weighing down banks’ books.

“We have no intent on using PPIP at all. We don’t need it. We have our own assets. If we want to sell them, we’ll sell them,” he told reporters. “If we want to buy them, we’ll buy them.”

The Treasury Department played down the concerns, saying they were confident there will be significant interest from other banks who do want to participate and that the program will be launched “as soon as possible.”

Still, some analysts said Dimon’s comments could lead to other large banks remaining on the sidelines.

“If JPMorgan is not going to participate, chances are that other large institutions won’t be participating either,” said Sung Won Sohn, an economics professor at the Smith School of Business at California State University.

Some large banks want to get away from doing business with the government over fears they will be subject to too many restrictions now or in the future, Sohn said.

Spokesmen for other major banks mostly had no immediate comment following Dimon’s remarks. Like JPMorgan, which received $25 billion, several other recipients of government money under the bailout program ­- Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley – have expressed interest in repaying it soon.

“We have said that we support the government’s plan to help financial institutions to shed troubled assets,” said Julia Tunis Bernard, a spokeswoman for Wells Fargo in San Francisco. However, she added, the bank also is evaluating its own plans for buying or selling assets.

Goldman Sachs spokesman Michael DuVally in New York said the company continues to evaluate the public-private investment program “and have discussions with government agencies about it.”

Treasury Secretary Timothy Geithner unveiled the PPIP on March 23. The goal is to the toxic assets, sour real estate loans and distressed securities backed by mortgages, off banks’ books so that they can resume more normal lending to consumers and businesses and help combat the country’s recession.

Treasury is employing the resources of the government’s $700 billion bailout program along with support from the Federal Reserve and the Federal Deposit Insurance Corp. to attract private investors to buy the distressed assets.

Treasury spokeswoman Stephanie Cutter said the department had been pleased by the interest shown since Geithner unveiled the proposal.

“We’ve been encouraged by the interest by both investors and financial institutions who wish to participate in creating a market for these legacy assets,” she said in a statement. “We are working to launch the program as soon as possible.”

Alois Pirker, an analyst for the Aite Group, said if JPMorgan holds on to the assets, it may be betting the economy will turn around and they will be worth more.

Karen Shaw Petrou, managing partner at Federal Financial Analytics, a financial industry consulting firm, said Dimon’s comments underscored that the government’s program was still in the formative stages. She said that uncertainty was causing many institutions to be cautious.

Petrou is telling her clients “to think it through the way you would like it to work without ruling anything out.”

“None of this stuff is getting off the ground very well,” banking industry analyst Bert Ely said of the government rescue programs.

JPMorgan “feels that they don’t need to play,” he said, and other banks in relatively strong condition also could demur because “it makes no sense to lock in losses” by selling problem assets at a discount.

AP Business Writer Marcy Gordon in Washington contributed to this report.

AP-ES-04-16-09 1720EDT

Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.