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Treasury Will Make a Profit On Bailout: Pimco’s Gross

Bill Gross, co-chief investment officer of bond manager Pimco, said he believes that the Treasury Department will eventually make a profit on its purchase of toxic assets from Wall Street banks. “I estimate the average price of distressed mortgages [that Treasury will buy]…will be 65 cents on the dollar,” said Gross in Wednesday’s Washington Post. “Financed at 3-4% via the sale of Treasury bonds, the Treasury will therefore be in a position to earn a positive carry or yield spread of at least 7-8%,” said Gross.

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