By some account, the subprime mortgage mess (which seizes up the credit market and leads to scores of writedown of subprime loans and investment-graded investments that are backed by subprime collaterals) that starts in August 2007 should lead to $200 billion writedown. So far, we see a number of exits of high-profile C-suite (eg. Chuck Prince and Stan O'Neal) and not-so-high-profile second-tier executives (eg. CIBC). And the exposed writedowns that have been accounted for is $100 billion.
Well, with the wonders looming over where the other $100 billion is, no wonder the financial stock is beaten down in the market.
I wonder how these supposedly smart suites can be so blindsided by the voodoo of securitization of subprime loans that banks once shunned.
Wednesday, January 16, 2008
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