Billionaire investor Wilbur Ross said Thursday his company, WL Ross & Co., would commit $1 billion towards an insurance program as an alternative to the proposed $700 billion bailout.
“The government would guarantee one half of the mortgages that had been reduced to the true net value of the house, after selling commissions,” said Ross, CEO of WL Ross, in an interview with CNBC. (To hear more about Ross's plan, watch the video.)
“Then that one half that was guaranteed by the government could be sold separately by the lenders—so that would free up liquidity and could be sold on a much lower yield than the mortgage itself.”
The government, lender, and homeowner would each receive one-third of the appreciation of the first sale of the house, he said.
The plan would ease the problem of getting new mortgages and provide liquidity to the original lenders, he said.
Ross is critical of the bailout plan that was passed by the Senate late Wednesday.
“It shouldn’t really be called the Wall Street bailout bill," he said, "It should be called the lobbyist reward bill.”
Although Ross lauded lawmakers for increasing Federal Deposit Insurance Corp insurance on bank deposits to $250,000, he raised issue with certain features.
“Some of the other things are obviously a little bit whacky— repealing the 39-cent excise tax on children’s arrows made of wood and reducing the tariffs on importing rum from Puerto Rico and places like that to the mainland,” he said. “So I suppose the people whose houses are being foreclosed can drink rum and watch their kids shoot bow and arrow.”
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