The U.S. government's move to pour $250 billion into banks was appropriate and sufficient, but the markets will take time to heal, Mohamed El-Erian, Pimco co-CEO and co-chief investment officer, told CNBC Tuesday.
"The damage has been done so deep that it doesn’t turn on a dime … we are now in the healing process, but it will be bumpy," El-Erian told "Squawk Box."
The banking model won't go back to its "old evil ways," will be radically different from before the credit crisis and will more resemble a utility, El-Erian said.
(Watch the first part of El-Erian's interview left, click here for the second part and here for the third).
"You're going to a world where the banking industry is slimmer, it’s de-risked, its return on equity is less. It’s going to become like a utility … because society cannot accept privatizing the gains and then socializing massive losses," he said.
Investors that have navigated this situation well and have cash today could be in line for some "amazing opportunities" in specific areas, but "people shouldn't run in and buy everything right now," El-Erian warned.
El-Erian praised the government plan for addressing "every level of the capital structure," and " trying to crowd in the private sector."
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A public/private partnership could help the healing process go even faster, according to El-Erian, adding "there is value here."
Speaking after President Bush gave a key address on the government action, El-Erian said they are sending a strong signal that this is not just a US response, but a global one.