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HANG ON TIGHT

HANG ON TIGHT
Marathon Asset Management's Mark Kleinman
Is Marathon Asset Management's Mark Kleinman grasping the podium out of strength or financial terror? Yesterday, we were in the mood for some Securitization 101, so we stopped by the Friars Club to get a crash course at National Realty Club’s bi-weekly luncheon (and not one cancelled by snow this time). Mark’s good news: we’re back from the brink. The bad news: we’re still close to the cliff. He began from the roots of the modern banking system, started from laws enacted during the Great Depression, then discussed its history up to the total securities market doubling the loan market by ’06. The party was over by the summer of ’07, leaving us where we are now—and banks have lost $1.7 trillion so far.
HANG ON TIGHT
Marathon has $1B in capital to spend, but he says you can’t get any assets: Banks are sitting on loans, kicking the can down the road, and the government isn’t in a rush to push them off the cliff. The government needs to get investment, employment, and spending going, and a vehicle to gradually exit the market, he urges. Some commercial paper is moving again, but the largest cloud over our heads is what may happen to Freddie and Fannie. He expects commercial real estate to worsen this year, with more write-downs and bank failures on the horizon.