Wall Street Warch: Temporary Setback Seen for Mortgage Securities
Brockman, Joshua, American Banker
The chairman of BlackRock Inc. sounded a cautionary note about the mortgage-backed securities market. "The de-leveraging going on right now"- the unloading of mortgage securities by hedge funds-could mean a relatively lean year for compensation, said Laurence D. Fink.
But the disruption will be only a temporary setback in what has been "a big success story for everyone," Mr. Fink said.
"I believe the market is pretty darned efficient, and we will see a resolution to some of these problems," he said.
Mr. Fink, who is also BlackRock's chief executive officer, spoke last week at a Bond Market Association dinner in his honor.
Though 1998 will not be as bountiful as past years, he said, he predicted "huge opportunities for the survivors on the Street."
Outstanding mortgage-backed securities, collateralized mortgage obligations, and asset-backed securities are valued at more than $3.4 trillion, he noted.
Mr. Fink was introduced by Leland Brendsel, chairman and chief executive officer of Freddie Mac.
Though many securities markets have been "disrupted and intimidated," Mr. Brendsell said, the market for securities backed by conventional mortgages "continues to perform well and flourishes."
Mr. Fink, who was given the association's distinguished service award, founded BlackRock in 1988. The company, now a unit of PNC Bank Corp., has more than $120 billion of assets under management for institutional and individual investors.
A distinguished service award was also given, posthumously, to Austin V. Koenen, who was deputy chief executive officer and head of investment banking at China International Capital Corp.
Mr. Koenen died in May. China International, created in 1995, was the first joint-venture investment bank formed with Chinese and foreign partners. …