Subprime, CDO Bank Losses May Exceed $265 Billion

killer2021 · #1 (**permalink**) 01-31-2008, 04:33 PM

Losses from securities linked to subprime mortgages may exceed $265 billion as regional U.S. banks, credit unions and overseas financial institutions write down the value of their holdings, according to Standard & Poor's. S&P cut or put on review yesterday the ratings on $534 billion of bonds and collateralized debt obligations tied to home loans made to people with poor credit, the most by the New York- based firm in response to rising mortgage delinquencies. While banks and securities firms such as Citigroup Inc. and Merrill Lynch & Co. accounted for most of the $90 billion in writedowns to date, S&P said the next round will be borne mainly by smaller financial institutions in Europe, Asia and the U.S. The ratings actions may create a ``ripple impact'' that further reduces prices of the securities, S&P said.

cbass1017 · #2 (**permalink**) 01-31-2008, 11:59 PM

I love how some people are blaming the government for this! If you ask me I think the blame should be equally shared between the government, banks, and ofcourse us the consumers. Although the banks should have never made so many adjustable rate mortgages the federal government just sat back and watched, while we kept buying homes beyond our means and refinancing them every time we built any equity in our homes to hide our other debt. I may get some strong responses from this but I want to hear what people have to say about it.

Hermes · #3 (**permalink**) 02-01-2008, 08:30 AM

The government should never get involved with business in the first place. Markets work best without any interference from the government (they are the last you want to get involved).

Banks, financial institutions and consumers messed up and the majority knew they should not get the loans. Personally, I think they should not get a bail-out. That does not make any sense at all. They messed up so let them deal with the results.

Not a single person has forced banks to make such loans and not a single person has forced individuals to get a home that they could not afford.

What's next...investors who loose money in the markets due to their own mistakes that ask for refunds and bail-outs from the government?

cbass1017 · #4 (**permalink**) 02-01-2008, 08:59 AM

It is funny that you say that because there actually have been quite a few cases out there where investors tried suing the companies they owned stock in due to poor performance. Ironically in almost all of these cases though the govt. has stepped in to block the law suit from even taking place.
Probably one of the only times I won't mind the govt interfereing!

I truly agree with you though, I dug myself into a huge hole years ago and had to dig myself out. No one was there to hold me by the hand and help me with my financial troubles. The best lessons learned are from the mistakes we have made.

Sponsors