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Banks write off 80% of subprime losses
Global banks have now written off more than 80% of their losses against assets linked to the US subprime mortgage market, according to a report by Fitch Ratings. Fitch estimates that total losses on subprime residential mortgage backed securities and CDOs will total about $400bn. Half the potential losses sit with banks, which have now disclosed 80% of them. The report is likely to fuel the growing sense of optimism throughout markets in recent weeks, following the rescue of Bear Stearns in mid-March. Since then, both equity and credit markets have rallied and liquidity has returned to some areas. But Fitch stressed that progress on mortgage write-offs did not mean it was calling an end to the entire crisis, as banks may still have some losses to take.
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agree with harry e it’s a half a story as usual from the ratings agencies, real mortgage write downs to come
I too sense we are still very much in the denial phase. In that sense, we probably are closer to the ‘end of the beginning’ than the wishful thinkers would concede. We certainly haven’t reached acceptance yet - still got to get through the anger first
Writing down bond investments backed by mortgages to market is not the same as the writing off of mortgages on balance sheets.
The latter will only happen as house prices fall and default occurs. It hasn’t even started in the UK yet.
yeah more Alt-A writedowns to come
Pull the other one! Bear in mind that this is a ratings agency’s prediction - circus clowns have more credibility.
OK, that’s sub-prime. What about all the Alt-A and prime borrowers? Methinks we’ve only just started to write down those. Record foreclosures in the Hamptons can’t be a good sign…