At his perch just across the river from the Federal Reserve, Neal Wilson likes to evangelize about the opportunity that the regulator is helping create for investment firms like his.
A campaign by US watchdogs to strengthen banks’ balance sheets is spurring lenders to explore creative ways to reduce risks on their books. Increasingly, they’re turning to significant risk transfers — a bit of Wall Street alchemy that shifts the first losses on loans for things like cars, commercial properties and corporate operations — to investors such as Wilson. If the loans perform well, he can reap a tidy profit.
