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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Wallace Rivers who wrote (30229)4/15/2008 1:34:51 AM
From: Spekulatius  Respond to of 70381
Wb - interesting numbers.

Subprime exposure now only 1.7B$, whittled down through writeoffs from 3.8B$.

There is also still about 11B$ in commercial mortgage and leveraged finance exposure. they have only written down 5% of the total - this does not sound like enough many leveraged buyouts have been trading at 90c on the $, so roughly 500M$ more in writeoffs to get them down to market value.

Now the big problem are the 60B$ in home equity and 120B$ in pick a payment mortgages plus 60B$ in traditional mortgage. i'd guess when it's all said and done, WB will write off 10% of pick a payment and 3% of home equity loans and mortgage loans. that would amount to 15.5B$ in additional writeoffs - minus 50% of existing reserves (50% of 6.5B$ -3.25B$ which also cover credit cards and other loans) , so i think they show about 12-13B$ in additional losses down the road.

WB shows that we are basically going from a subprime (and Alt-A ) crisis to a "prime" loan crisis. Not a lot of fun to be a banker these days. of course i have no idea of these numbers are correct, they might be off by a 100% and I have no clue in which direction, but i sort of trust my back on the envelope calculations more so than the banker and analyst double speak.