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Toxic Assets Market Awaits Rebound

Last Friday, NPR listeners learned that the Planet Money team had bought its own toxic asset — one of those complicated mortgage bonds that was at the heart of the financial crisis.

But while that asset and its contents are now online for all to see, the status of other toxic assets is pretty murky, and the market is still stalled.

During the peak of the housing market, the value of the mortgages that got stuffed into these bonds was more than $3 trillion. At least half of that could now be considered toxic. And there still aren't many buyers. The asset that the Planet Money team bought — which was particularly toxic — may have had only two or three potential buyers, according to one expert. In all, roughly $500 million in toxic assets trades every day, which is a very small percentage of the total.


Lots of big institutions — pension funds, insurance companies, banks — are still holding these assets. There isn't much of a market now, and some people are hoping that the value will rebound at least a little as the economy stabilizes. And that's probably one reason some banks are not lending as much as they might: They've got these questionable things on their books.

The government gave up on its original plan to buy hundreds of billions of dollars worth of toxic assets. But in a smaller program, the Treasury Department has teamed up with private investors. The aim is to buy about $40 billion in toxic assets in order to jump-start the market.

There are also conferences where people interested in distressed investing gather to talk about the toxic assets market. At one of those conferences recently, an industry expert was kind enough to point out that 41 percent of the loans in Planet Money's toxic asset "are either dead or soon to be dead."

The Planet Money team spent $1,000 of its own money on its toxic asset. So far, the team has received $332 in payments; the next payment is supposed to arrive Friday. The team will give any profits to charity.

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