Wilbur Ross interested in U.S. toxic fund

Date: Wednesday, February 18, 2009
Author: Jennifer Ablan, Reuters.com

Billionaire investor Wilbur Ross said on Tuesday he would invest in the U.S. government's private-public investment fund designed to help mop up banks' troubled assets, provided that low-cost funding, as well as guarantees in sharing investment losses, are involved.

"Part of the reason this fund needs to be leveraged is simply the scale of this thing," Ross told Reuters in an interview. "If they are going do it, they should be doing it on a very big scale. Otherwise it doesn't solve anything."

Ross, who made his fortune buying distressed companies and has already been buying up battered assets amid the fallout from the subprime mortgage crisis, said he was willing to share profits with the government. "It is premature to get into numbers because you need to negotiate all aspects of it, but the concept of sharing in gains and sharing in losses I think is a valid concept," he said.

Last week, U.S. Treasury Secretary Timothy Geithner called for a new program that would combine public and private capital to be used in a fund that will buy troubled bank assets of up to $1 trillion, aimed at unfreezing credit markets.

Geithner's plan calls for a fund seeded with public money that would leverage up to $500 billion -- and possibly as much as $1 trillion -- to purge toxic assets from a weakened banking system.

Ross, who runs the private-equity firm WL Ross & Co., declined to comment whether he has been in contact with Treasury officials, saying, "I think they are getting plenty of input from all kinds of people in the private sector."

Private equity is flush with cash and could be huge buyers of these toxic securities, he added.

"There is a lot of capital in private equity funds -- in various countries," Ross said. "They have bought up distressed loans before."

Overall, Ross said the due diligence is a major issue. "These are going to be masses of loans, somebody has to be permitted to go in and do some research; otherwise how could you rationally figure out what to pay for them?"

Ross said he would be interested in purchasing toxic securities including collateralized debt obligations, leveraged loans, credit-card receivables, mortgage bonds and other distressed assets "depending on the pricing."

Last year, Ross committed over $3 billion to battered assets including municipal bonds, mortgage servicing and bond insurance.

WL Ross had recruited the former chief executive of North Fork Bancorp, John Kanas, to help identify, restructure and manage distressed financial services institutions.

In the past year, WL Ross has acquired H&R Block Inc's subprime mortgage servicing operations for $1.3 billion and bankrupt American Home Mortgage Investment Corp.

(Editing by Leslie Adler)