US banks Citigroup and Merrill Lynch reveal fresh $15bn loss

[chat_noir]

Source: TimesOnline

CITIGROUP and Merrill Lynch will heap further pain on Wall Street this week as they reveal additional sub-prime write-downs totalling $15 billion (£7.6 billion) or more.

In another sign of the intense pressure on leading banks, Deutsche Bank is attempting to offload some of its €35 billion (£28 billion) of toxic debt to a consortium of private-equity firms.

Huge exposure to American mortgages is expected to result in Citi taking a $10 billion hit to its accounts, dragging the bank to a first-quarter loss of almost $3 billion. Some analysts believe Citi’s write-downs could stretch to as much as $12 billion.

Merrill will suffer $5 billion of write-downs, analysts say, which would push the bank $2.7 billion into the red.


Read more: http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3671568.ece

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Citigroup, Merrill May Post $15 Billion Writedowns, Times Says

April 13 (Bloomberg) -- Citigroup Inc. and Merrill Lynch & Co. will reveal at least $15 billion more of subprime mortgage writedowns this week, the Sunday Times of London reported, citing analysts it didn't identify.

Citigroup will have $10 billion of writedowns, taking its first-quarter loss to about $3 billion, the newspaper said. Some analysts say the Citigroup writedowns may stretch to $12 billion, it said. Merrill may have a $5 billion writedown, taking it to a $2.7 billion loss, the report said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a14SC3UVha.4&refer=home

[hatrack]

1. But the fundamentals of our economy are strong! The subprime problems are contained!

I know because the Simian Dauphin and his merry band of collateralized debt-swap pranksters told me so!

[dixiegrrrrl]

2. I have just one thing to say and to think about this

Neener neener neener

[CountAllVotes]

3. drip drip drip drip

Trickle down economics at their finest. How many more of these corrupt financial institutions have more subprime mortgage losses that they have not yet reported?

This is getting very ugly and will obviously get a whole lot uglier!

:kick:

[Xenotime]

25. Yup. Good bye american economy...

I'll bet we start using the Canadian dollar before long.

[PSPS]

4. Not to worry. The Fed will swap them for treasuries at 100% of their value!

That's what they're doing now -- exchanging these worthless securities for 100 cents on the dollar for US treasury notes. In other words, bush and his cronies are bailing them out with our taxpayer money, as well as that of many future generations.

[defendandprotect]

5. And do we hear anyone in DC calling for renewal of New Deal regulations on banking ???

Remember when the GOP used to oppose money for education because you couldn't improve education "by just throwing money at it" . . . ??? !!!!

[Joe Chi Minh]

20. Oh, I always loved the way they used that expression. NOT!!! Such double-dyed

hypocrites... That is exactly what should be done, where the common weal is the beneficiary.

You either worship God and despise money. "Or you worship money and despise God." In addition, Christ's own likening of the Second Commandment to the First, suggests that when money is "thrown" by our respective Governments at the problems and necessities of poorer folk, as, indeed, the Scandinavians do, God is greatly pleased, so endless beneficial synergies are created.

On the other hand, you only have to read of the dystopian, coke-sniffing world and general spiritual indigence and disorientation of the gilded youth of the super rich, in the daily papers, to be reminded that all that's gold doesn't glitter in any worth-while sense, but rather, the contrary. Too much money and privilege are an albatross about the poor mites' necks.

[Deny and Shred]

6. When they sell these to the FED, do they get their mark-to-market price?

If so, these corporate losses will be much smaller while the taxpayers hold them and try to sell them in ten years. Once the mortgages fold, these derivatives are worthless, so these FED actions are really just disguising the real losses.
They stopped the release of the M3 (money supply) so nobody knows what the true cost to the taxpayer is.
The FED has been buying $50 billion a month, up from $20 bil in December. They've announced it will continue unabated. This ought tot keep corporate losses to a couple billion here and there, ugly but manageable.

Question 2: Does anyone know if foreign banks, like Deutche Bank, are able to unload their multi-billion dollar mistakes on the FED? My guess is no, hence their interest in other capital, non-central bank capital.

[mapatriot]

7. Plenty of blame

Lots of blame to go around here:
1.Mortgage Banks and Mortgage Companies, along with their commissioned mortgage agents, found a way to generate billions in fees without maintaining any liability. They just sold the debt to investors who assumed that the banks and mortgage brokers had made prudent primary residence loans.
2. Big Wall Street firms who never seem to learn, from ample history, that what goes up too fast comes down equally fast. They purchased mortgages from the fraudulent and hyper-greedy banks and mortgage brokers and sold it to their clients as "prime" investments. Of course, they too collected huge fees to act as the conduit. And they failed miserably to conduct the proper due diligence as to how these mortgages were underwritten.
3. Rating agencies (S&P and Moody's, in particular)who also let investors down by giving high marks to the mortgage "packages", even though they knew (or should have known) that those investments were backed by highly shaky loans. They, too, received huge fees to underwrite the packages.
4. Borrowers who put themselves at great risk borrowing hundreds of thousands, often way more than they could possibly afford to pay back. They bought into the myth that real estate would just go up and they could turn the property over at a profit if their payments got unwieldy. These folks were often more motivated by greed than by the desire for the American Dream.
5. Federal and State regulators who knew full well that the sub-prime mortgage business was a house-of-cards and turned a blind eye. They were more attuned to the profits of big business than to the safety and security of the nation and of taxpayers.
6. The Congress and the administration, who were, are and always will be more interested in the next election and enriching themselves and their friends than in protecting our economy and the people who aren't rich and famous.

So, Citigroup (Smith Barney) and Merrill and Morgan Stanley, UBS, Wachovia, J.P. Morgan, Goldman Sachs, Lehman Brothers, Bear Stearns (r.i.p) et.al. are easy targets and certainly are among the greedy and disingenuous. But their "sins" are no greater than every other entity who played a role in this economic catastrophe.

[madrchsod]

8. plus years of the unraveling of the banking laws

from the last great depression. bill clinton signed the death of the last 1930`s banking act. thus the moneyed class was free to loot the taxpayers of every dime we have...

[Baby Snooks]

13. Thank you!!!!!

"bill clinton signed the death of the last 1930`s banking act."

George W Bush may have raped us but William J Clinton ripped off our clothes and threw us to the ground.

[PetraPooh]

19. Wow, well said.

[Arctic Dave]

11. Spot on analysis. Short and to the point. n/t

[SpiralHawk]

9. The republicon recession deepens

Because of republicon "regulation and oversight." Pathetic.

Thanks a pantload, Republicons. This is a catastrophe of your making.

[mapatriot]

10. Not just republicons

Sadly, even progressive legislators were asleep as all of this unwound. It did start with the Reagan administration and the myth of "trickle down" but our democratic legislators, state and federal, co-opted in missing the ball on this one.

[SpiralHawk]

12. I reject that assertion. The republicons are to blame

I know they and their weasling well-paid propagandists want to evade or to spread blame around - as usual -- but I ain't buying it.

This is a republicon recession. Period.

[Jackpine Radical]

15. The Dems did everything they could in the wake of Enron, etc.

to erect tougher regulation. The Republicans would have none of it.

[Jackpine Radical]

14. Monday the floor will drop out of the market.

Watch for the Dow to lose 300 minimum. Then during the rest of the week it'll creep back up.

I'm always reminded of how I would catch minnows when I was a kid. I would lie on the dock looking down into the water with a bit of bread dangling from a string in one hand and a minnow net in the other. The minnows would gather around to nibble at the bread, and I would swoop with the net to catch a few of them. The rest would scatter like a million little darting flashes of silver. Then, soon as I had emptied the net of my catch, I would wiggle the bread around a little again, and soon the minnows would return, having apparently forgotten all about their recent close encounter with doom. Swoosh again, and some more are caught. If I wanted to, I could spend the entire summer afternoon doing that, and they would keep falling for the same simple trick. The market in these times seems a lot like that. The bait is dangled. Swoosh-disastrous news. The investors scatter. But they can't stay away. Soon they're back for another nibble at the bread. They never learn, they never remember.

[Phred42]

16. Again

[bluesmail]

17. ...so goes America, once great, now bankrupt

financially and morally bankrupt

[Xenotime]

26. I blame * and the rethugs on a whole...

I hear Chavez has room for us. Maybe we should go down there.

[paparush]

18. When Cheney Attacks Iran...we'll forget all about this...

Nothing to see here..move along.

Forced Labor Camps - Lose the Fat Making Bullets of Freedom

[ShockediSay]

21. Wells Fargo {WFC} also reports this

coming week

Place your bets !!!

[roamer65]

22. The Fed is going to be busy Monday creating money on their computers.

[Neshanic]

23. Nikkei down 450 now.

[tom_paine]

24. That's OK. The Bushies will just print $15,000,000,000 more and give it to them.

Nothing to see here.

Move along.