Money manager Invesco Ltd (IVZ) and renowned investor Wilbur Ross announced Monday they will head a group committing $1 billion to buy toxic bank loans and securities through the Treasury Department’s Public-Private Investment Program [PPIP].
Also helping in the effort is real-estate firm LeFrank Organization, bond insurer Assured Guaranty Ltd. (AGO), and American Home Mortgage Services Inc. (AHMIQ), the nation’s largest servicer of subprime mortgages with 525,000 loans in all 50 states and $110 billion servicing portfolio. Mr. Ross said, “Our investment team will benefit from the mortgage market knowledge bases and skills of …our portfolio companies..”
Under the terms of the PPIP, the Ross team’s $1 billion would be matched by the Treasury Dept.
The group then could borrow as much as six times that amount through a program backed by the [FDIC], which means the group would have $14 billion in purchasing power. [via Reuters]
Martin L. Flanagan, President and CEO of Invesco said:
“We strongly believe that the [PPIP] will help stimulate the mortgage market and provide individual and institutional investors globally with compelling investment opportunities…” [via Invesco]
Some critics remain very skeptical about PPIP and have questioned whether the program is simply designed to enrich big investors.