"I will end up with a bank"

Wilbur Ross, known for his investments in troubled companies in the steel and automotive industries, stated his firm would eventually end up with a bank before the recession ends. "We will end up with a bank, there is no doubt," said Ross. He is a major figure in the private equity industry, and had planned to purchase a bank last year. However, this plan delayed after the government pumped capital into America's banks as a part of a plan to halt the recession. He estimated that this move delayed his investment into a commercial bank or thrift institution from six to twelve months. Ross has already made his moves in this recession, buying H&R Block's sub-prime mortgage servicing unit for $1.3 billion and acquired the bankrupt American Home Mortgage Investment Corp. However, some of these investments are bad investments, such as buying the bond insurer Assured Guaranty's stock for $23 a share. It has now fell about 50% since February, the time he bought it.
Buying a bank is not a bad investment. Other private equity investors are also looking for banks to purchase. Ross explains, "What is important is to get access to a stable, low-cost source of funding. That is what we are interested in." Another positive note for Ross and his fellow investors is that banking regulators have relaxed restrictions for potential buyers in hopes of convincing outside investors to bid for the banks.
As all investments are, buying banks still have high risks. The private equity firm TPG invested in Washington Mutual last year, a bank which collapsed in September, becoming the largest bank failure in history. It was then sold to JP Morgan Chase.
Ross argues that it makes more sense if private equity firms are allowed to take full ownership of the bank they purchase instead of just a small stake.
"Private equity is not passive. We are not minority investors. We are control investors. That is the whole theory of private equity - adding value through better management," he said.


Many rich investors are either pouring money or about to pour money into the markets. With prices for many industries, such as the real estate and stock market, falling steeply, almost any investment makes a good investment. When the recession is over, most of these prices will rise again. I think investing now is a great idea as things have already went past the rock bottom. The bottom has already passed when the Dow went below 8,000. I don't think it will ever go that low again, unless one of the Big Three fails, which is unlikely to happen. If a person does not start investing now, they will miss a chance to make great amounts of money.

http://money.cnn.com/2009/01/06/news/companies/ross_banks/index.htm