According to The New York Times "economists say the troubles in the mortgage market could, all told, cost financial firms and investors up to $400 billion." The figure includes losses in home values and nearly $72 billion in sub-prime foreclosures between now and the end of next year.
For investors in commercial and investment banks, the question becomes whether there will be more bad news on write-down in fixed income assets tied to mortgages. Companies like Bank of America (BAC), Citigroup (C), and Merrill Lynch (MER) have already taken huge hits in earnings.
And, that may only be the beginning of it.
Douglas A. McIntyre