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Investor Wilbur Ross said he has $700 million ready to invest in a mortgage-backed securities offering through the government's Public-Private Investment Program.
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Ross' Invesco is among nine firms the government has selected to help get toxic assets off the balance sheets of troubled banks.
Even though a few high-profile names, particularly the Pacific Investment Management Co., or Pimco, have backed out, Ross said he's optimistic about the program and believes the investment will generate solid returns.
"We're quite excited about the program," Ross said during a live CNBC interview. "We think it's the right thing for the economy and we think it's the right thing for our investors."
The Treasury Department is allocating $30 billion toward the program, which has become smaller than the government originally had hoped. Investors are required to kick in $500 million each initially.
Ross said he has committed that much on his own plus another $200 million that Invesco [IVZ
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] has raised through a real estate investment trust, or REIT.
"The fact that I'm committing private equity capital is an indication that we think there will be respectable returns," he said.
Some banks have become reluctant to sell their troubled assets at fire-sale prices as the sector has grown stronger and as changes in mark-to-market accounting rules allow more flexibility on balance sheets.
But Ross said he thinks sellers will break down into several categories: the 77 banks that federal regulators have seized; those that have received Troubled Asset Relief Program money and can't afford to pay even the preferred stock dividend required under the program; larger banks that are looking to return TARP money; and regional banks that may need TARP money in the future as the commercial MBS market deteriorates further.
"When you think about it as a buyer of the paper, the source of it doesn't appear to make too much difference to us," Ross said. "It's just a question of can we reach an agreement on price and can it produce a compensatory return for us."
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