Sub-Prime Mess hurts Financials in 3rd Q

Blame it on the Sub-Prime mess, because thats the thing to do when you are a financial company reporting a third quarter loss or a thrid quarter decline in profits. Two years ago the mortgage industry when the mortgage industry was booming everyone jumped in, it seemed as if everyone was approved for a home. The standards were more relaxed than previous years and it did not matter if you were a single parent with 3 kids making $20, 000 a year, because the mortgage broker found some way to decieve you into believing that you could afford a $300, 000 home.

Flash forward to 2007 and many subprime mortgages are now in default. Mortgage Brokers are sitting on the expensive boats, or driving their penthouses or driving their expensive cars with the money they made from sub prime loans while many of their so called clients are in foreclosure.

As a result Citi Bank, the biggest U.S. bank, took a pretax write-down of $1.4 billion as of the end of the third quarter. Bear Stearns said last month it was writing down its $7.6 billion portfolio by about $250 million, or 3.2%. Morgan Stanley wrote down its $31 billion portfolio by $726 million, or 2.3%. The financial times is reporting that Bank of America and J.P Morgan will write down about $3 billion in losses.

http://www.soletraderblog.com