Current Events > Economics

Banking Bust: More To Come

(1/4) > >>

Hawkgirl:
Banking Bust: More To Come
Liz Moyer, 01.16.08, 4:30 PM ET


Banks have written down more than $100 billion since the summer. Yikes. Now the bad news: There are still billions worth of potentially toxic securities sitting on the books.

The additional $1.3 billion write-down disclosed by JPMorgan on Wednesday was just the latest loss big banks have reported in the fourth quarter. Merrill Lynch is expected to report a sizeable write-down when it reveals fourth-quarter numbers on Thursday, by some estimates in the neighborhood of $15 billion. Bank of America, Wachovia and other big lenders report next week and are also expected to write down billions of securities holdings.

At Citigroup, $37 billion of collateralized debt obligation exposure remains even after the bank wrote down an eye-popping $17 billion of its holdings in the fourth quarter. Of course that raises the likelihood that Citi will have further substantial write-downs in the quarters ahead. The bank reported a more than $9 billion loss in the fourth quarter because of the write-downs and related credit costs, the worst quarter in its history.


http://www.forbes.com/home/wallstreet/2008/01/16/banking-cdo-credit-biz-wallst-cx_lm_0116banks.html


O% Down, 3 and 5 year ARMS, everyone gets approved, regardless of credit rating....How's that working out for you? :doh:
We are in this mess, not only because people purchased more than they can afford, but also because banks were giving out money to people they shouldn't have.  That's why real estate went through through the roof a few years ago..So now everyone is feeling the pain, including the lenders.
These stocks aforementioned are going to plummet when their earnings are reported, stock holders will bail, stock market will see a steady decline.
Now the questions is, good buying opportunity, or keep your $ in Cash and wait out this slump?  Assuming of course, we don't head into a deep recession.

Chris_:
This, too shall pass.

This is a blip.  37 billion in a multi-trillion industry?

In the meantime, keep your long-term goals the same.  A little extra gold wouldn't hurt but if your eyes are 10-20 years down the way, then this will be meaningless.

NHSparky:
Okay, banks buy tens of BILLIONS in paper from people who wouldn't qualify for a loan at Cal Worthington Ford (or his "dog" Spot) and they're SURPRISED when these trailer park rejects who couldn't break 500 on either their SAT's OR their FICO scores default because they can't afford a 500K mortgage working at Burger King?

Well, smack my ass and call me Susan!  Let's bail these worthless mouth-breathers out so they can do it again!

Lauri:
i agree this too shall pass...


what ive read, and it could be wrong, is that only 7 percent of the home mortgages in the US are in default. a good portion of that 7 percent were either 'flippers' or second homes. or the people who kept cashing out their equity.. still, its such a small group of people and its being way overblown i think.

the average American is not a sub prime borrower. the fact that retail sales were down over Christmas shows that Americans arent willing to get into really deep debt just for a holiday.

i'd wager its a two year cycle and we can expect housing prices to come back .. if a Dem gets into the White House, expect a new wave of prosperity to dovetail with their taking office.  the headlines will change overnight.

NHSparky:
It's not 7 percent.

It's 0.7 percent.

Navigation

[0] Message Index

[#] Next page