Friday, January 11, 2008

The Writedowns Continue

From Bloomberg:

The world's biggest financial institutions have announced about $100 billion in writedowns and loan losses sparked by the U.S. subprime mortgage slump. Zurich-based UBS AG, Europe's biggest bank by assets, said today this will probably be another difficult year for the industry, urging shareholders to back its plan to raise $11.8 billion from Singapore and the Middle East.

It's taken us about 6 months to get $100 billion in writedowns. Total estimates for the writedowns have ranged between $300 - $500 billion. So assuming the same time scale we have about another year of writedown news. Well, let's start the year off right, shall we?

Merrill Lynch & Co., the third- largest U.S. securities firm, may write down $15 billion related to U.S. mortgage losses, almost twice its original forecast, the New York Times reported, citing people briefed on the plan.


Citigroup, the biggest U.S. bank, may post about $14 billion of writedowns when it reports fourth-quarter earnings next week, JPMorgan Chase & Co. analysts estimated today. Bank of America Corp. may announce writedowns linked to collateralized debt obligations of about $5 billion, they said.

Personally, I wish every bank would come out and say, "we're taking a really big hit this quarter of XX%, but that's it." Just get it over with. Instead, we're in a slow bleeding scenario where the markets have no idea when the next writedown will happen or how much it will be.