The fact that the private sector is “transacting” in toxic assets again shows a return of confidence to the market, Neel Kashkari, Pimco managing director and head of new investment initiatives, told CNBC Monday.
“Obviously, real estate is a big part of what’s driving toxic assets, and the real estate markets have adjusted,” said Kashkari, who previously was an assistant secretary of the US Treasury, during the financial crisis, when TARP(Troubled Asset Relief Program) was administered.
In Kashkari's Treasury role, he headed the unit that bailed out troubled banks.
A toxic asset , a term coined during the financial crisis of 2008 and 2009, is an asset that becomes illiquid when its secondary market disappears.
“There’s a lot more certainty among investors in terms of what the [assets] losses will be and what they’re worth. So the fact that the private sector is transacting in these assets is a good thing, and it shows that confidence is returning to the market. That’s good for everyone.”
On Monday, the Bank of America Corp put up for sale at least $1 billion worth of toxic mortgage assets, the New York Post reported.