China is reportedly investing $2 billion in the American housing market.
The large state sovereign wealth fund is buying mortgage-backed securities, helping the U.S. take them off the books of banks, part of Washington’s public-private partnership plan to buy some $40 billion in toxic assets.
CNNMoney: China’s $200 billion sovereign wealth fund, which suffered big paper losses on stakes in Morgan Stanley and Blackstone, is set to invest up to $2 billion in U.S. mortgages as it eyes a property market recovery, two people with direct knowledge of the matter said Monday.
China Investment Corp. (CIC) plans to invest soon in U.S. taxpayer subsidized investment funds of toxic mortgage-backed securities, which it sees as a safer bet than buying into the Federal Reserve’s Term Asset-Backed Securities Loan Facility.
Granted, they’re just investing $2 billion — pretty small by China and U.S. banking standards. We’re still surprised, however, that CIC is eligible for the program.
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