Invesco picked to help revive 'toxic asset' market

The Atlanta Journal-Constitution

To Atlanta-based Invesco, the so-called toxic assets that have sent many banks tumbling dangerously into the red present a golden opportunity.

The investment management firm plans to raise up to $1.1 billion over the next three months to buy troubled assets — primarily mortgage-backed securities — from financial companies.

Late last week, the U.S. Treasury selected Invesco and eight other investment firms to join the government in a public-private program designed to resurrect the moribund market for toxic securities.

The goal of the program is to clean up banks’ balance sheets so they are able to make new loans, thus kick-starting the sluggish economy.

Invesco, Atlanta’s largest investment management firm with about $389 billion in assets under management, said the program offers opportunity for investors able to hold onto securities long enough for the market to turn.

… Invesco makes its money by charging a management fee.

But it’s far from clear that the program will work, said Don Sabbarese, director of the Econometric Center at Kennesaw State University. A key question, he said, is whether banks will be willing to sell at prices investors want to pay.

… As a result, many banks have been reluctant to make new loans, said Sabbarese. He lauded the government for taking steps to cleanse bank balance sheets.

“If you fix this, you’re going to fix the economy a lot faster, or at least make it a lot better,” he said.