Big investor not worried on subprime spread

NEW YORK (Reuters) - Concerns that the financial sector could suffer substantial losses from the recent meltdown of the subprime lending sector are "way overstated," the head of Mellon Asset Management's alternative investment division told Reuters on Tuesday.

Phillip Maisano, who invests roughly $5 billion into hedge funds through EACM Advisors, a Mellon Financial Corp. MEL.N subsidiary, said the flurry of real estate loans to borrowers with shaky credit histories in recent years was expected to lead to a losses eventually.

"The subprime problem is overstated with respect to the financial sector," Maisano told the Reuters Hedge Funds and Private Equity Summit in New York. "Way overstated."

More than 30 subprime lenders have sold assets or quit the industry in the last year in the wake of rising delinquencies and defaults among borrowers with substandard credit histories.

The business failures and bankruptcies have raised concerns over a wider threat to the financial system. But Maisano said he doesn't see it "bleeding" into healthier parts of the financial world.

"What I worry about is a big institution getting into trouble," said Maisano. But he said so far, "we're not having a credit crunch. There is plenty of money out there."