Subprime, CDO Bank Losses May Exceed $265 Billion

[killer2021]

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.

http://newdailyview.blogspot.com/2008/01/subprime-cdo-bank-losses-may-exceed-265.html

[mbhunter]

Digging up an old thread I am, but, yeah, this is going to suck life out of the economy.

This isn't just companies coming clean and taking write-offs for goodwill; they have to according to new accounting rules that went into effect as of mid-November 2007. Assigning a value to CDOs is no longer subject to as much interpretation.