Online Market to Help Release 'Toxic' Assets.(Special Report)

Byline: Amilda Dymi

New York-Online marketplaces may be one efficient way to detoxify a bank's balance sheet and provide a complementary tool to government efforts to revitalize the securities market.

SecondMarket, an online marketplace and auction platform for illiquid assets, says it is expanding to assist private investors and governments in the U.S. and abroad to address the so-called legacy asset problem. It has added specialized markets for mortgage-backed securities, whole loans and collateralized debt obligations to its centralized marketplace. The company said hundreds of its trading network of 2,500 buyers and sellers "have expressed an interest in purchasing residential and commercial MBS, CDOs and portfolios of various whole loans, including residential, commercial, construction, consumer and industrial loans."

"Today, the multitrillion-dollar MBS, whole loans and CDO secondary markets are nearly frozen. For the global economy to recover, it is critical to unfreeze these assets from the balance sheets of financial institutions around the world and restart the securitization markets," said SecondMarket CEO Barry Silbert.

Mr. Silbert is one of those who support the federal government's efforts to address the so-called legacy assets and restart the securitization markets within an independent, active, and well-organized secondary marketplace that provides data transparency and price discovery.

As a rule these types of assets are not easy to analyze and/or evaluate because related data are not fully traceable. Hence, the obscure nature of these assets creates an obstacle to investors trying to manage pricing valuations.

SecondMarket offers investors the ability to determine the value of these assets by providing data transparency. SecondMarket participants receive free aggregates of data on MBS, whole loans and CDOs. An added outlet is the SecondMarket Ecosystem, a network of third-party service ...