Fast Money trader Joe Terranova doesn’t see the market turning a corner until banks get bad assets off their books. And he has a plan!
As you might know we call Terranova the Liquidator because he has extensive experience selling off assets that few people want.
He tells us that the market for assets currently on the balance sheets of major banks probably isn't coming back anytime soon. That’s because the toxic assets are tied to real estate woes which will probably get worse before they get better.
We’re talking about things like credit default swaps and mortgage backed securities. “It’s not a liquidity crisis it’s a capital crisis,” he says.
So what do you do with the toxic assets?
“The Fed and Treasury need take the bad positions out of banks' hands,” says Terranova.
But he also thinks they can be sold. “Mark this stuff to pennies on the dollar and at that level you could find a buyer.”
And the way to find those buyers is to list these highly distressed assets on an open exchange. “Give me a marketplace and buyers will step up,” he demands.
Jeff Macke doesn't agree. He thinks you can create a marketplace and in turn transparency but that won't change a thing. “A transparent autopsy is still pretty grim,” bristles Jeff Macke. “The reason you can’t get transparency is because it’s hideous to see.”
“But at least you’d know who’s dead,” concludes Dylan Ratigan.
Intrigued? Want to know more? Watch the video now!