Bloomberg reports today:

The Federal Reserve’s $1 trillion effort to restart the market for securities backed by loans is encountering resistance from investors, undermining Chairman Ben S. Bernanke’s attempt to further drive down borrowing costs.

Investors are concerned that Congress, while responding to taxpayer anger over bank bailouts, hasn’t described how the most sweeping regulatory overhaul since the Great Depression will change the ways financial companies turn a profit. The government needs Wall Street to help revive credit yet can’t ignore the outcry over aid to firms that took excessive risks.

“I can do very well for my clients without venturing into federal waters which are inhabited by sharks,” said David Kotok, the chairman of Cumberland Advisors Inc. in Vineland, New Jersey, who manages about $1 billion. “We are leery of doing anything with the federal government.”