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JSM Financial: Private equity giant Fortress Investment Group to target assets of ailing lenders
Fortress expects many banks to fold over the next few years.
By: JSM Financial
The firm’s co-chairman Peter Briger says the firm views itself as a “financial services industry garbage collector,” JSM Financial has learned, adding that he expected a steady increase in the amount of assets coming out of the Federal Deposit Insurance Corp over the next few years.
At a recent private equity conference Briger said that because lenders and banks had made too many loans early on in this decade they were now being forced to trim their balance sheets. He pointed out that that failing banks and other financial institutions had recently announced plans to sell $1.6 trillion worth of assets and he predicted that there would be an additional $5 trillion to $10 trillion worth by banks, commercial real estate investors and the shadow banking fraternity.
"In the next five years we'll see more financial asset liquidation out of the regulated banking system and shadow banking system than we've seen in the sum total of the last 100 years,” JSM Financial understands Briger added.
Shadow banking refers to lending funded by bond buyers and other investors not in the traditional banking system rather than by deposits. The industry has experienced a significant decline making credit far less available to many sectors of the economy.
The Fortress chairman said that he predicted that within the next five years the classic distressed debt business would likely become one of the “world’s great opportunities.”
JSM Financial understands that later on in the conference he forecast that over two thousand other banks controlling more than $2 trillion of assets could possibly fall in the next few years.
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