Last year, Wilbur Ross warned about problems in the financial markets. That is, there would be issues with liquidity and that dealmakers – especially on the private equity side – were paying too much on transactions.So far, he's looking prescient. Then again, Ross is a restructuring guru and has been spot-on with plays on steel and telecom.
Well, BusinessWeek has a great interview with Ross.
What is his perspective on the latest turmoil on subprime mortages?
Interestingly enough, Ross's investment firm -- W.L. Ross & Co – lent $50 million into American Home Mortgage Investment, which went bust because of iffy mortgages.
So will there be a turnaround in subprime? He thinks so – but don't rush in. After all, Ross looks at the long haul.
Essentially, he thinks that the subprime market is valid – and that there's a need for it. But, the problem was that loans had rates that did not reflect the risk. Ross calls it "risk-ignored rate of return."
To get the full interview, click here.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
Reader Comments (Page 1 of 1)
8-11-2007 @ 9:18AM
Jane said...
I think there will be some very nice investment opportunities for people who have cash on hand. There will be foreclosures that can be bought for a great discount.
8-12-2007 @ 9:50AM
condoman said...
When the real estate market stalls, the economy stalls. For a year and a halp the media and stockpickers have been spreading hysteria about the real estate market. Now it has gone bust. Thanks.
Prime borrowers cannot sell their property and buy up properties financed by subprime loans, so the subprime borrowers will walk away from their homes.
Now, many prime borrowers cannot even get a loan. The banks have tightened the standards to such an extreme, that I doubt Bernecke could get a loan.
To say that our ecomony is strong in the face of a real estate downturn is a lie. A house is made of a million parts. Where do we get them? Who makes them? Americans. When homeowners move into a home, they buy furnishings for the home, purchased in the US. Do they now? No.
A home used to be the single most important asset owned. Because of the media hysteria and the tightening of credit. A home is considered a liability.
8-12-2007 @ 4:00PM
Michael J Schneider said...
A recent synopsis of a CNBC interview with Wilbur Ross is available free for those interested at (left side) http://www.Barreloworld.com (link attached to my profile here).
8-18-2007 @ 1:48PM
Rex Dixon said...
Lending Club's Sr. VP Patrick Gannon wrote a post this morning entitled - "The Subprime Meltdown: What is the bottom line?" - comments or quoting is encouraged!
Here is the permalink: http://blog.lendingclub.com/2007/08/18/the-subprime-meltdown-what-is-the-bottom-line/
Rex Dixon
Director of Social Media Content
Lending Club