Vulture investors enter the mortgage market
{ Posted on Feb 26 2009 by Zac Bissonnette }
Portfolio reports on the hedge funds and other money managers that are looking to make a killing buying up those badly beaten down, highly illiquid mortgage assets that have been the ruin of so many of the world's largest financial institutions.
According to Portfolio, "There are now ample opportunities for distressed-asset investors. . . Prices for such securities are very low, even considering the awful state of the economy. That's because the market for mortgage-backed securities is flooded with sellers, as banks, hedge funds, and other investors in collateralized-debt obligations, or CDOs, head for the exit."
This is a perfect example of a how the market can take care of helping the banks get the bad assets off their balance sheets: Well-capitalized hedge funds, private investors and sovereign wealth funds are ready and able to move in and buy toxic junk at fire-sale prices. There is a market for these "bad assets." The prices aren't as high as the banking clowns would like, but that doesn't mean that we need federal intervention. If they need to sell their garbage, they can call up hedge fund managers like Steve Persky and make him an offer he can't refuse.
There might not be as much money flowing into it as they'd like. But if they keep lowering the prices, the big guns like Warren Buffett might decide to join the party. The notion that toxic crap should be dumped on taxpayers because the banks can't find anyone willing to pay them what they think it's worth is deeply troubling to me.
According to Portfolio, "There are now ample opportunities for distressed-asset investors. . . Prices for such securities are very low, even considering the awful state of the economy. That's because the market for mortgage-backed securities is flooded with sellers, as banks, hedge funds, and other investors in collateralized-debt obligations, or CDOs, head for the exit."
This is a perfect example of a how the market can take care of helping the banks get the bad assets off their balance sheets: Well-capitalized hedge funds, private investors and sovereign wealth funds are ready and able to move in and buy toxic junk at fire-sale prices. There is a market for these "bad assets." The prices aren't as high as the banking clowns would like, but that doesn't mean that we need federal intervention. If they need to sell their garbage, they can call up hedge fund managers like Steve Persky and make him an offer he can't refuse.
There might not be as much money flowing into it as they'd like. But if they keep lowering the prices, the big guns like Warren Buffett might decide to join the party. The notion that toxic crap should be dumped on taxpayers because the banks can't find anyone willing to pay them what they think it's worth is deeply troubling to me.
Filed under: Good news, Financial Crisis
Vulture investors enter the mortgage market originally appeared on BloggingStocks on Thu, 26 Feb 2009 15:53:00 EST. Please see our terms for use of feeds.
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