Private-Equity Landlords Won't Blow Up the Economy

While it often makes sense to be skeptical of financial innovation, securitizing rental payments is probably a good idea.

David Dayen, a thoughtful analyst of housing issues, is concerned that no good will come of the move by private-equity firm Blackstone Group to raise$479.1 million by issuing a new type of bond backed by rental payments on more than 3,000 single-family homes. Where Dayen goes wrong is assuming that these securities will help fuel another bubble and crisis, or breed "absentee slumlords." The less exciting reality is that the rental market for single-family homes will probably remain a niche business that will be profitable for some people and make little difference to the rest of us.

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