"Major investment firms around the country, want to add a new wrinkle to the $700 billion federal bailout proposal: a chance to buy the same distressed, mortgage-related assets the government is preparing to purchase from troubled financial companies"
Then why didn't they buy them up BEFORE the BAILOUT?
"Ronald P. O'Hanley, chief executive of BNY Mellon's $1 trillion investment group, is urging the government to make room for private firms to participate in auctions of those devalued assets.... his firm has "money on the sidelines" that it's prepared to invest in the right opportunities.... in hopes of making a profit later."
So they can get them for PENNIES on the DOLLAR, right?
And his firm has MONEY on he SIDELINES? Why HOLDING BACK?
Meanwhile, the U.S. taxpayer is going to get stuck with the shit!
"Private equity firms... are flush with cash and... would also reap the profits.... Foreign investors also are likely to look for opportunities as depressed assets come to market.... O'Hanley also said private firms have to tread cautiously to not appear to be vultures."
Even though THEY ARE!!!!
So THAT'S who is going to get the BAILOUT, folks!!!
"Some look to buy distressed assets" by Beth Healy, Globe Staff | September 29, 2008
Boston's Bain Capital and Bank of New York Mellon, along with major investment firms around the country, want to add a new wrinkle to the $700 billion federal bailout proposal: a chance to buy the same distressed, mortgage-related assets the government is preparing to purchase from troubled financial companies.
The federal bailout would establish a new government fund with authority to buy securities and other assets tied to mortgages, getting them off the books of struggling financial companies and easing the current credit crunch. Ronald P. O'Hanley, chief executive of BNY Mellon's $1 trillion investment group, is urging the government to make room for private firms to participate in auctions of those devalued assets.
O'Hanley said his firm has "money on the sidelines" that it's prepared to invest in the right opportunities. And industrywide, he said, "There are lots of distressed funds waiting to buy. An auction process will provide a mechanism to bring those players in." Distressed debt funds are pools of money put together to buy troubled securities in hopes of making a profit later.
At Bain Capital, one of the nation's five largest leveraged buyout firms with $25 billion in untapped capital, Wall Street's woes smell like opportunity, according to a person involved in the firm's plans. That opportunity could take shape in a number of ways: buying troubled financial companies, or pieces of them, cheaply; and in the form of buying mortgage-backed securities at distressed prices, in order to turn a profit on them later.
So WHY did they have to WAIT for $700 billion in taxpayer monies?
The principle behind the unprecedented federal bailout is to free up capital at companies that are holding mortgage-related investments, to fuel the economy, and for the government to acquire assets that, in theory, are still valuable, because most of the underlying mortgages are performing.
Even if they are worth about as much as this turd in my palm!
The focus of congressional leaders behind the bailout plan has been to authorize the government to buy troubled assets. So far, there's been no specific provision for buyers from the private sector.
That investment firms such as Bain, BNY Mellon, and Blackstone Group of New York want a chance to bid on these assets is evidence that there's value there. And private equity firms - which make money by buying companies, overhauling them, and reselling them or taking them public - are flush with cash compared with the banks and investment banks that are now tapped out and struggling for capital. They would buy assets that otherwise would be paid for by taxpayers. They would also reap the profits should the market restore value to those assets.
Some private equity investments were made too soon. Texas Pacific Group, a large buyout firm, led a $7 billion purchase of Washington Mutual Inc. in February and lost more than $1 billion of its own money when the thrift failed last week.
Mark T. Williams, a professor of finance and economics at Boston University's School of Management, said the worst is not yet over in the financial sector. With capital tied up at giants like Bank of America Corp., which is digesting acquisitions of troubled mortgage concern Countrywide Financial Corp. and broker Merrill Lynch & Co., they probably will not be available to make additional purchases of assets or companies. And trouble could spread to credit card issuers and other parts of the industry, he said.
It ALREADY IS!!!
"How much more do you want to acquire and digest when you still have issues on your own balance sheet?" Williams said. Foreign investors also are likely to look for opportunities as depressed assets come to market, specialists said. They have done so in the public markets already, pouring large sums of capital into Wall Street firms since the subprime mortgage crisis began in the summer of 2007. Morgan Stanley, one of the last investment banks standing, along with Goldman Sachs Group Inc., said last week it was selling an $8.5 billion stake to Japan's Mitsubishi UFJ Financial Group Inc. in an effort to shore up its own capital. Both Morgan Stanley and Goldman Sachs are applying to become commercial banks.
Investment managers said the government bailout is critical, at this point, to ending the chaos in the financial markets and stopping the concerns over runs on banks such as the one that brought down Washington Mutual, sold last week to JPMorgan Chase & Co.
