CDO Cuts Show $1 Trillion Corporate-Debt Bets Toxic

[RedEarth]

Source: (Bloomberg)

Oct. 22 (Bloomberg) -- Investors are taking losses of up to 90 percent in the $1.2 trillion market for collateralized debt obligations tied to corporate credit as the failures of Lehman Brothers Holdings Inc. and Icelandic banks send shockwaves through the global financial system.

The losses among banks, insurers and money managers may spark the next round of writedowns on CDOs after $660 billion in subprime-related losses. They may force lenders to post more reserves against losses after governments worldwide announced $3 trillion in financial-industry rescue packages since last month, according to Barclays Capital.

``We'll see the same problems we've seen in subprime,'' said Alistair Milne, a professor in banking and finance at Cass Business School in London and a former U.K. Treasury economist. ``Banks will take substantial markdowns.''



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a5x0jMKZf4yc&refer=home

[Winterblues]

1. While the problems may be the same I think it was tax apyers that took the hit and not the Brokers

Or Investment houses or what ever you call them. we just bailed them out so they haven't taken any hits and neither will the Banks.. They will get our money until Democrats take over completely and end this corruption..This has been the longest (eight years) sustained robbery of the US Treasury in our History..

[bemildred]

2. Boy, that is really putting lipstick on a pig:

"The upside is that you've now drawn a line on those assets and you know you're not going to lose more than your hedging costs," Parker said. "Unless, of course, your counterparty goes under."

This in a situation where you are paying $7.5 million in front and $500 thousand a year for $10 million of "insurance" for five years.