This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Toxic Assets Veteran Says Plan Won't Help

Stocks in this article: BAC GS MS

Lynn Tilton has gotten her hands dirty in toxic assets and bad banks before, and sees "fatal flaw s " with the Obama administration's plan to kick start the credit markets and make the U.S. financial industry healthy again.

Tilton, the CEO of $6 billion private-equity firm Patriarch Partners, was responsible for creating a "bad-bank" structure for FleetBank, used in 2000 to unload $1.35 billion in troubled loans several years before it was absorbed by Bank of America (BAC). Tilton engineered a similar deal for CIBC the following year.

She holds a patent for a valuation method that she says effectively finds a middle-ground price for troubled assets weighing down banks' balance sheets. Banks have been unwilling to sell at the fire-sale bids they have received since the financial crisis heated up last year, and investors like private-equity funds and hedge funds have not yet raised offers on their own, either because they are unwilling or unable to obtain financing to do so.

Tilton has been involved in the industry for nearly three decades, and cut her teeth making deals at Morgan Stanley (MS), Goldman Sachs (GS), Merrill Lynch and Oppenheimer (OPY), as well as private firms. Patriarch makes direct investments in over 70 middle-market distressed businesses, including manufacturing, technology, health care and staffing and services companies.

Following is an interview, edited for style and length, about Tilton's views on the Public Private Investment Program that promises to spend up to $1 trillion in government funds to finance toxic-debt deals. What do you think of the PPIP as outlined today?

Lynn Tilton: I think this is good socially, and a good step in the right direction, but I don't think you have mutually aligned incentives. I don't think it will work.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs