Prospective Buyers of Toxic Assets Wary of Plan

LAS VEGAS, Feb. 10 -- Some of the people who the Obama administration hopes to coax into buying toxic securities from banks reacted today with interest, caution and most of all frustration that more details were not forthcoming.

Hundreds of investors in securitized assets are gathered here this week for an industry conference that has been consumed by conversation about developments in Washington.

In the morning, attendees clumped around televisions to watch Treasury Secretary Timothy F. Geithner describe his program for reviving the banking industry, in part by persuading private investors to partner with the government to buy devalued assets.

The verdict of several watchers: Interesting outline, no substance. And a growing impatience from a broken industry that the government has not yet found the way to help.

"He said all of the right things, things that needed to be said, but there are still some real specifics that have yet to be cemented," said Ralph C. Daloisio, managing director of the structured finance group at Natixis, a French bank, and the new chairman of the American Securitization Forum, which is hosting the convention.

Securitization made possible the rapid expansion of American lending in recent years by allowing investors to bundle loans and sell them, generating fresh funds to lend again. But when the loans in those bundles started to go bad, the global financial system was brought to its knees.

Now it is an industry in hibernation.

Securitization experts say the business of packaging loans for sale to investors will not revive until the marketplace can be cleared of the wreckage of past bundles. That won't happen until home prices stabilize, because mortgage loans make up the bulk of the industry's raw materials, and falling home prices drive down the value of the bundles.

After that, the industry will need to find people willing to buy new securitizations, in part by changing the way they are sold. ASF started working on those rules, including improved disclosure and accountability provisions, at last year's conference in Las Vegas. By summer a draft was complete, in part, said one participant, because industry members now have time to discuss and address long-standing issues.

But the plan remains on hold because the first two problems remain unsolved.

"It's all about D.C. at this point," said Michael Rieger, senior portfolio manager at Seix Advisors, which handles investments for large institutions.

This conference once was a vast marketplace for sellers and buyers of securities, with panel discussions as a gloss on the bazaar. This year, the idled dealmakers listened as lawyers and regulators sorted through the wreckage of their industry. Optimism, where it could be found, usually regarded the year 2010, or perhaps 2011.