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Wilbur Ross Details Plan to Buy Toxic Assets

Vulture investor Wilbur Ross on Monday made public a partnership with money management company Invesco (IVZ - Get Report) to invest in troubled assets alongside the government through a new program.

The Treasury Department's Public Private Investment Plan (PPIP), unveiled in March, will allow large banks like Bank of America (BAC - Get Report), Citigroup (C - Get Report) and Wells Fargo (WFC - Get Report) to sell billions in distressed assets clogging their balance sheets.

It is unclear which institutions will sell into the program, but some, including Goldman Sachs (GS - Get Report), have said they may want to participate as buyers.

Ross talked with on Monday. He declined to discuss BankUnited Financial (BKUNA), the troubled Florida bank he is reported to be bidding for along with the Blackstone Group (BX - Get Report) and The Carlyle Group. What is your sense of how willing banks are going to be to sell into this plan?

Ross: Nobody knows for sure. But I think there are two questions. One is, will they offer paper? The other is, at what price will they offer it?

When will we know the answers?

We won't know until the sales actually occur. Right now, where the process stands is on the securitization side. The applications had to be filed at the end of last week. So we filed as I'm sure did some others. Treasury has indicated there'll make some sort of a selection by the middle of May to be followed by transactions in June. On the whole loan side, that's being run by the [Federal Deposit Insurance Corp.] They have not come with any specific dates yet.

How will the auction actually work?

It's unknown at this point.

How does your ownership of American Home Mortgage Servicing help you bid on these assets?

It helps in two regards. When you're dealing with whole loans, particularly in residential, if you have a large number of loans, somebody has to service them. So that's one way, but the more substantive way is American Home is servicing 525,000 mortgages, totaling $110 billion all around the country, so they have a very good insight into what's going on all the time in all the important markets, so that will be very helpful to us in terms of figuring out what to bid.
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