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.htmlO% Down, 3 and 5 year ARMS, everyone gets approved, regardless of credit rating....How's that working out for you?
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.