March 5 (Bloomberg) -- Billionaire investor Wilbur Ross said his firm will probably participate in a new U.S. Federal Reserve program that seeks to channel $1 trillion into securities backed by consumer debt.

“A lot will depend on the actual arithmetic and actual offerings they come up with,” Ross, chairman and chief executive officer of New York-based WL Ross & Co., said today in an interview. “But in principle I think it addresses the requirements we think it should address.”

The Term Asset-Backed Securities Loan Facility, or TALF, will lend funds beginning March 25 to investment companies to help fuel the purchase of securities backed by auto and business loans. Investors that participate in the program can borrow funds based on the amount of money they commit and will be protected against some potential losses.

“Investors would have a limited risk factor,” Ross said. “If they correctly pick and price underlying assets they should be able to not shoot the moon but to make a reasonable return.”

Ross said he would invest money already in funds managed by his company, a unit of Atlanta-based Invesco Ltd. He wouldn’t estimate how much he might invest, saying not enough information was available.

The biggest unanswered question, he said, is the degree to which investors will be permitted to perform their own vetting of the loans underlying the securities available for purchase. The Fed has said the securities must be AAA rated and backed by “newly and recently originated” loans.

‘Constructive’

Ross said that while loan securitization had been abused, the government’s efforts to resuscitate the practice was “constructive.”

“It’s very important to find a mechanism to finance consumer purchases,” he said.

In October, Ross bought American Home Mortgage Servicing Inc. out of bankruptcy. On Feb. 5, that company agreed to buy the billing-and-collections rights on 185,000 mortgages from Citigroup Inc. Ross in January took a majority stake in First Bank and Trust Co., a community bank in Indiantown, Florida, to use as a platform to buy more banking assets.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

Last Updated: March 5, 2009 15:30 EST