Banking, finance, and taxes
Mortage Business Crashes As HSBC Writes Off
Published:
Word from the Sunday Telegraph is that HSBC (HBC) will write down $11 billion in mortgages These loans are part of the Household operations that the bank bought.
Fremont General (FMT) has announced that it will exit the sub prime business and sub-prime lender New Century is being investigated by the government and has covenant problems with its own lenders.
The question facing the markets now is whether the problems with mortgages will spread to the middle markets, those loans that are above sub-prime but not loans to home owners with perfect credit. If default rates begin to rise sharply in this sector, large US banks including Citigroup (C) and Bank of American (BAC) could have earnings difficulties.
Douglas A. McIntyre can be reached at [email protected] . He does not own securities in companies that he writes about.
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