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Holly LaFon
Holly LaFon
Articles (7846) 

Wilbur Ross Tells Fox Business Network That the 'Exploitation of Shale Gas' Is the Best Way to Overcome the Recent Negative GDP Numbers

January 31, 2013 | About:

Billionaire investor Wilbur Ross spoke with FOX Business Network (FBN) about economic growth opportunities for the United States through the production of shale gas. Ross stated that “the best way to overcome the negative gross domestic product” would be “to encourage the exploitation of shale gas both for domestic and for international purposes.” In addition, Ross discussed the investment losses of the Trouble Asset Relief Program (TARP), saying “it was never set up to be on a commercially normal basis” and “was fated not to be structured in a way that you could make a profit.” Excerpts from the interview are below:

On the maritime transport and shale gas industries:

“Well, maritime transport and shale gas. And they both quite interrelated. America is blessed with having huge reserves of shale gas that can be exported if permits are granted by the federal government. So far, they have only granted one license and that was to Cheniere for the Sabine River Project…Something like 16 others that have been pending for a couple of years. The best way to overcome the negative gross domestic product figures that were just released would be to encourage the exploitation of shale gas both for domestic and for international purposes.”

On the lack of permits granted for shale gas extraction:

“Well, you know, the greenies worry that shale gas would drive the price of electricity down and make sun power and wind power even more uneconomical than they are. But the truth is that both could co-exist. You could use the natural gas to be very economical for your base power load and then to the degree that wind power available, let that be your supplement.”

On the investment losses of TARP:

“Well, TARP in its original structure, it was never set up to be on a commercially normal basis. If you look at what [url=http://www.gurufocus.com/StockBuy.php?GuruName=Warren Buffett]Warren Buffett[/url] charged Goldman Sachs for convertible preferred, the coupon is something like twice what the government was charging the banks in TARP and he had 100 percent equity convertibility, not just a few warrants. So it was fated not to be structured in a way that you could make a profit.”

On the structure of TARP:

“Well, I think it was a combination of things. It certainly was a bailout and you can argue whether it was needed or not. But the impetus was clearly was bailout. As to the control function, I’m not so sure that under the Bush administration, there was much interest in the control. I think that tended to come in more with the Obama administration.”

On whether TARP was needed:

“Well, sure. We’ve done it with a number of things. As you probably know, we’ve bought into the turnout, bought it from the FDIC, Bank United down in Florida. And 18 months later, it was the largest IPO of a bank in the history of America. It was very, very successful. Commercially reasonable deal can be made to work, but our deal worked well when you vend people preferred stock at a 5 percent dividend rate and just got a few warrants. It’s very hard to make that work because some will go bad and you don't make enough with the ones that work out in order to recoup the loss.”

On whether the TARP could have been replaced by private sector investors:

“Well, Ireland got billions and billions and billions of dollars, partly from us, partly from Franklin Templeton, partly from other investors. I can't imagine that we could have gotten billions and dollars together for TARP. I think there is a question of when there is an emergency, like say an AIG, I don’t know enough about the details of AIG to know who’s right. But if you really had to do it over a weekend, that money couldn’t be assembled over a weekend.”


Rating: 4.0/5 (3 votes)


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