U.S. Subprime Woes to Cost $150 Billion in Losses, Calyon Says
By Patricia Kuo, Bloomberg
Aug, 2007
The U.S. subprime mortgage crisis will cost credit investors about $150 billion in losses worldwide, according to Calyon, the investment banking unit of Credit Agricole SA.
Foreclosures may reach 20 percent of the $1.3 trillion of subprime mortgages outstanding, and under some assumptions, losses would be $130 billion. A further $20 billion could also be lost from the $1 trillion of outstanding Alt-A mortgages offered to borrowers with better credit.
The European Central Bank, the U.S. Federal Reserve and other central banks have injected more than $350 billion into money markets worldwide since Aug. 9.
Consumer lending standards have started to tighten in the mortgage sector and in other types of consumer loans such as auto loans and credit cards. Waning demand from investors for home loans has toppled more than 70 mortgage companies and half a dozen hedge funds in the U.S..
Big trouble! Is there a big business idea around here? I'm not well-versed with the finance/banking/investment sector to figure out any, but if there is big trouble, big opportunity cannot be far behind, can it?
Source: Bloomberg
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