Sunday, Feb 10, 2008
Possibility that governments might eventually need to inject capital into banks
FT: Subprime losses could rise to $400bn
Senior global policymakers have raised projections for the size of subprime-related credit losses in a move that implies financial institutions will have to increase write-offs.Speaking after the meeting of Group of Seven finance leaders, Peer Steinbrück, German finance minister, said the G7 now feared that write-offs of losses on securities linked to US subprime mortgages could reach $400bn. This is sharply higher than the $120bn credit losses that Wall Street banks and other institutions have revealed in recent weeks – and also far bigger than the US Federal Reserve’s estimates for subprime losses last year of $100bn-$150bn.
Posted by jack c @ 08:30 PM (1500 views) Add Comment
5 Comments
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1. japanese uncle said...
When a serious recession is in place, spiraling corporate/personal defaults will be simply out of control, where the amount of bad debt will be the function of time, naturally the bigger the later. From now we must refer to the size of bad debt, saying such and such billion dollars as at such and such date. The information will have to be updated every month or at least every other month. Welcome to the reality of lost decade.
Didn't I mention this ealier?
2. lvmreader said...
Amen, @Japanese Uncle
3. lvmreader said...
I have written to the FT on this topic and to influential thinktanks. It is why a bailout of the monolines is pointless.
4. dohousescrashinthewoods said...
I remember when the early-day soothing cooings of "a mere few million in writedowns" were issued, many here exclaimed "yeah hight, and the rest". QED.
JU, I agree, this is a unique time and people in the future will want to know what happened.
If we can document unfolding events, it will be a mine of information later. This news blog is already an excellent resource. It would be great to have a graph of writedowns and previously predicted writedowns to go with it.
5. jack c said...
The liabilities/writedowns just seem to be getting bigger and bigger and bigger as the months go by - a table or graph would be useful to show the estimated writedowns at outset and the latest estimates.
The biggest laugh is that today Royal Bank of Scotland, Barclays and Citi have offered to securitise half of the Bank of England's emergency loan to Northern Rock, in a move which would cut the public's exposure to the stricken bank.