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(01-06) 14:44 PST WASHINGTON, (AP) –

The Treasury Department said Wednesday that the decision by TCW Group Inc. to pull out of the government program to buy toxic bank assets will leave taxpayers holding $356.3 million in investments pending sale of those holdings to other investors.

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TCW Group Inc. announced on Monday that its UST/TCW Senior Mortgage Securities Fund partnership, with roughly $500 million in assets under management, had decided to withdraw from the Public-Private Investment Program, known as PPIP.

The Los Angeles-based money manager said it would liquidate the program and distribute the money back to the fund’s investors. The action came after TCW fired its chief investment officer, Jeffrey Gundlach, who was to be a manager of the fund.

Treasury on Wednesday said that the decision would leave the Treasury holding $356.3 million in investments in the TCW fund. While the government could lose money if the investments are sold at a loss, Treasury officials said they believed the government’s share of the investment was protected.

“Treasury has built in a number of protections that ensure we get the best execution on sales of securities from the portfolio,” Treasury spokesman Andrew Williams said.

The purchase of the soured mortgage securities and other assets are being supported through the government’s $700 billion financial rescue fund, known as the Toxic Asset Relief Program.

While the $700 billion fund was created by Congress in October 2008 with the goal of buying toxic assets to stabilize the banking system, then-Treasury Secretary Henry Paulson quickly abandoned that effort in favor of injecting billions of dollars of capital into banks.

Paulson said at the time that it would have taken too long to get the program for buying toxic assets into operation. That assessment proved correct given that the last of the nine groups selected to participate in the toxic purchase program did not fully qualify until a year after the rescue effort was launched.

The program has been plagued by delays and some analysts wonder how effective it will be. Some critics contend the effort puts government money at risk while benefiting wealthy private-equity firms. Treasury investments of $30 billion are used to bolster the resources raised by the private groups which were required to raise a minimum of $500 million each to begin operations.