“That doesn’t exist anywhere else in structured finance,” Gugliada said. “We’ve successfully used that model in other markets, now we’re going to try to apply it in this space.”

Although Gugliada acknowledges that this is not a panacea, SecondMarket is positioning itself so that it’s ready to do business when the picture clears up a little.

“The market is what it is right now,” Gugliada said. “Everyday there’s something new coming out of Washington, and there’s still a lot of uncertainty and the markets are still bid 10/offer 90 and just making that information public is not going to close the gap per se but as things become more clear, as government policies get adopted and approved, by midyear, you are going to have a relatively active two-way market in distressed paper. Bank valuations will start to come in line with market valuations, and paper will start moving.” The key, Gugliada said, is to launch the company’s structured finance platform before secondary market activity takes off again.

“The key is to make sure that you have the buyer and seller network in place and you have the ability to build on it,” Smith reiterated. “That’s what we’re bringing to our market place — an installed base of buyers so that once the sellers come on board, you have a marketplace that’s ready to go from early on.” — KS

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