Thursday, November 1, 2007
But, but, but it was all a storm in a teacup!
Two weeks ago, Citi said that it had lost $1.6bn on mortgage and loan-backed securities as a result of the credit market turmoil during the third quarter. But Merrill Lynch’s disclosure last week that it had suffered writedowns of $7.9bn on its similar holdings has raised fears that Citi’s losses have mounted significantly.Merrill ousted Stan O’Neal as chairman and chief executive after revealing the losses that it suffered were almost double the figure it had estimated less than three weeks earlier. Citi was second only to Merrill last year as an underwriter of CDOs, structured investments created from bundles of mortgages. As demand for the securities dried up over the summer, the banks have been left with large inventories, which have fallen sharply in value.