Devaney Says Big Bank May Sink

Feb 5 2008 | 1:00am ET

Hedge fund manager John Devaney has gone from optimism to fear-mongering at a desert pow-wow.

The United Capital Markets Asset Management chief told the American Securitization Forum conference in Las Vegas that there’s a 20% chance a “major international investment bank” will go bust as non-subprime mortgage-backed bonds may bring further losses.

“It’s getting worse and worse every day,” he said, saying the fall in non-agency mortgage securities “may be more of a problem than the subprime crisis.”

Devaney’s fund lost about 35% last year, buffeted by losses in the credit markets, and forcing him to sell his yacht and private jet. But at the conference, Devaney reiterated that the market collapse has opened opportunities.

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