S&P Slashes Ratings, Lowers Outlook on $534 Billion of Mortgage Debt, CDOs

[Purveyor]

January 30, 2008 17:40 EST

Jan. 30 (Bloomberg) -- Standard & Poor's said it cut or may reduce ratings of $534 billion of subprime-mortgage securities and collateralized debt obligations, as home loan defaults rise.

The downgrades may extend losses at the world's banks to more than $265 billion and have a ``ripple impact'' on the broader financial markets, S&P said.

The securities represent $270.1 billion, or 47 percent, of subprime mortgage bonds rated between January 2006 and June 2007, S&P said today in a statement. The New York-based ratings company also said it may cut 572 CDOs valued at $263.9 billion.

The downgrades may increase losses at European, Asian and U.S. regional banks, credit unions and the 12 Federal Home Loan Banks, S&P said. Many of those institutions haven't written down their subprime holdings to reflect their market values and these downgrades may force their hands, S&P said.

``It is difficult to predict the magnitude of any such effect, but we believe it will have implications for trading revenues, general business activity, and liquidity for the banks,'' S&P said. The ratings company will start reviewing its rankings for some banks, especially those that ``are thinly capitalized.''

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http://www.bloomberg.com/apps/news?pid=20601087&sid=a_4VyhJYfZfQ&refer=worldwide

[Pale Blue Dot]

1. I'm beginning to think that tomorrow is going to pick up right where we left off

a week or so ago.

[Warpy]

2. Could be. All this deregulation means a lot of people

all over the country who did nothing wrong got flimflammed no matter where they've stuck their money for safe keeping: mattress, bank, investments, or even metals.

Meanwhile, the crooks had their hedge funds located in the Caymans--9000 of them at last count--and will likely take the ill gotten wealth and retire in multimillion dollar playhouses on Roatan Island and other enclaves of thieves, out of the reach of any regulatory agency or extradition for financial fraud.

Eventually everybody in the financial world is going to realize they've been taken for a ride, bigtime, and we'll get sensible regulation back until generations die and a new gang of thieves can ride in selling their "streamline business and reduce government" snake oil.