could well be the title of a recent article by AP Business Writer Rachel Beck, published online at FindLaw.com. Beck explores the attitudes of Wall Street investors towards distressed asset sales to Uncle Sam.
Troubled U.S. financial institutions stand a better chance of profitably selling their toxic accounts to the government than they do selling them to investors in the financial market. Additionally, Hedge and sovereign wealth funds will likely find a way of selling these accounts to the government.
The U.S. government may well be their only buyer, at least in the near future. Many private investors are either making bottom-dollar offers or are unable to obtain loans that would enable them to buy.
Bill Goss, CIO and founder of Pacific Investment Management Co., predicts that the U.S. government will pay around 65 cents on the dollar for mortgage securities. Considering how low some private investor offers have been (between 20-30 cents on the dollar), it would probably be wise for today’s troubled financial firms to take the deal.
Beck also makes the observation that the firms that qualify for the government bailout can boldly buy risky accounts on the cheap, and then sell them to Uncle Sam for a quick profit.
Or, as former hedge fund manager Andy Kessler says, “Any time there is a big pile of dough, guys on trading desks will figure out how to make money off of it.”
Truer words were never spoken.
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