Bill Gross says 35% haircut

makes you wonder why more private firms aren't lining up to pick these assets up.... we absolutely have billions in private funds out there...

No, it doesn't. It suggests that a pool of subprime mortgages is broadly worth 65% of its par value.

is there a link? I tried a google search and didn't find anything specific...

Unnamed is on the right track, though I think the assets in scope are more diverse than just "pools of subprime mortgages".

The key point is that there is a disconnect between the value of a pool of real estate and the value of a pool of debt collateralized by that real estate. There is a further disconnect between the value of that pool of debt and the value of securities based on the cash flow from that debt; and the more exotic the structure of those securities, the bigger the disconnect becomes.

Under the proposal - they can purchase more than just real-estate related debt/securities. They will also include credit card loans, auto loans etc. That is the last that I read for Paulson's changes.

http://www.cnbc.com/id/15840232?video=866439825&play=1

Agreed that there is not a 1 to 1 of the value of the "toxic assets" to house prices.

Just saying generally - he's come up with this 35% haircut number. Seems like the black hole that it is, it should have a significant gravitational effect.

Who cares that Gross, Paulson and Buffet agree? Shelby, Frank and Dodd, those are the guys we should trust with questions of high finance.

Well, it doesn't seem that Treasury or Fed has been particularly scintillating on this crises since the turn of 2008. And Paulson's gang is right out of Wall Street (how many former GS employees?), so their perspective on things has lost some credibility. Reading the diversity of opinions on what it will take to solve this crisis, I don't think anyone is particularly respectable right now. Given that, the $700 billion blank check without any strings or oversight is boarding on delusional. Certainly arrogant. At the very least, Congress needs to be able to pull the plug if these bozos' latest idea doesn't work either.

nyc10022 - The private funds do not have to rush to buy these assets. Pick it up after the collapse -- not on the way down. The concept of intervening at a higher level is to add stability. The duty of the private funds is in the inetrest of investors. It is a game of chicken. And the government is likely to blink before the firms with billions in its pockets.

Don't for a second believe that Bill Gross has the greater welfare of this country at heart. The guy runs the largest bond fund in the world, which has invested in many of the securities that would arguably be purchased in the bailout. He was also a vociferous advocate for the Fannie Mae/Freddie Mac bailout (he owns many of the subordinated notes) as well as a cheerleader for all of the rate cuts.

His fund performance has been the direct beneficiary of all of the Fed's and Treasury's moves to date, and he consistently pounds the table for a taxpayer bailout and rate cuts.

So ccdevi, don't be naive. You think a 35% discount is wisdom from Bill Gross, some great deal for the taxpayers? Just remember that Lonestar bought their portfolio at a 78% discount.

If Bill Gross could sell some of those securities at 65 cents on the dollar, he would laugh all the way to the bank.

Agree with last post. He is completely self serving, and I find his commentary deplorable because he makes it as if it's unbiased, though it is anything but unbiased. CNBC airs him nonstop because he is a major sponsor.