Subprime fall-out The rising defaults on subprime mortgages in the US triggered the global financial crisis. Hedge funds and banks across the world found themselves exposed, and governments are grappling with whether, and how, to help troubled banks. The US, through the Troubled Asset Relief Program, is moving to take these loans off of banks’ books
The number of US prime borrowers behind on home loan payments has risen sharply, signalling further problems for banks and investors
Potential problems for banks and investors
While others touted their lending to poorer, less creditworthy consumers as the industry’s philosopher’s stone, executives at many smaller US lenders have retained a conservative stance that helped them avoid the subprime crisis
And in theory depositors must share any losses, notes Robin Wigglesworth
Economic recovery: With data showing a slowing of the rate of decline, opinions are split on whether the US can help lead the world back to sustained growth
Washington faces a delicate balancing act as it presents the results of its bank inquiry, says Edward Luce
Wall Street is mistaken if it perceives a turnaround in the US housing market, says Stephen Lewis at Monument Securities
FGIC has already lost its top-notch ratings, while Ambac and MBIA, the biggest bond insurers, are likely to have another week or so to come up with a firm plan. Who will hold their nerve longest in the monoline poker game?
Shares in Macquarie Fortress Notes dropped 56 per cent after the investor in high-yield products was forced to sell some US debt investments at a loss after breaching bank covenants
Leading banks were under renewed pressure to fast-track plans to shore up struggling bond insurers after Warren Buffett revealed he had offered to take over the high-quality portions of the insurers’ portfolios
Confidence in the credit markets suffered a fresh blow after AIG, the insurance group, disclosed problems with valuing its derivatives portfolio
NAB savaged by investors after the Australian lender’s surprise admission that it would take additional provisions of A$830m against its portfolio of collateralised debt obligations
Speculation about the UK bank’s future earnings power is growing, with profits estimated to fall by 30% and further writedowns might have to be made on its Treasury assets
Governance of financial groups is being questioned after the market shake-out, but the shortcomings may lie more in the system than among individuals
Investment bank to set up derivatives business in London and Asia in a move that highlights the financial health of Japanese institutions relative to their US and European rivals
The pugnacious head of Lehman Brothers – the longest-serving chief of a big Wall Street bank – faces a tough battle to save it from being sold to a larger institution
Banks and investment banks whose health is crucial to the global financial system should have a unified regulatory framework with capital and liquidity requirements, according to the president of the Federal Reserve Bank of New York.
