Reselling Toxic Assets to Retail Investors

According to CNN/Money, the Treasury is exploring options to re-securitize (again!) toxic asset backed securities and make them available for purchase by retail investors. This is a political response to concerns raised by some that hedge funds and other institutions are the only potential beneficiaries of the government's public-private partnership program (TANF). Formany investors, this may be an attractive investment vehicle. If given the opportunity - I would certainly examine the alternative closely for clients. But the political liabilities - both in the short and long term mean that there will be so much hand-wringing over this that the Administration is likely to make the vehicle fatally flawed. The question is whether the consequences of the flaw will fall on the government or investors. If, like TIPS, the vehicle is flawed in favor of the investor - this may, in fact, be an outstanding opportunity. Let's keep our fingers crossed. Stay tuned!