Lone Star-Merrill deal marks power shift to funds

Reuters- Lone Star’s deal to buy bad loans from Merrill Lynch & Co signals a growing power shift as private equity firms mop up after the year-long credit crisis.

Merrill Lynch said on Monday it will take a $5.7 billion (2.9 billion pound) third-quarter write-down as it unloads large holdings of risky debt. More than $400 billion of write-downs and losses at major banks since last year characterized the first phase of the financial crisis.

"The second part of the story is the distressed funds that have been raising funds to take advantage of motivated sellers," said Frank Morgan, president of the UK-based Coller Capital’s U.S. unit in New York, where it has $8.5 billion in assets under management.

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