Subprime Losses Could Top $50 billion

http://www.insidearm.com/news/00013710-subprime-losses-could-top-50-billion/

The Credit Suisse Group is projecting that losses in the U.S. bond market due to the subprime mortgage fiasco could rang from $26 billion to $52 billion, according to reports today by Bloomberg.com and Reuters.

Analysts in Credit Suisse’s London office report that subprime defaults have created a “huge problem” for investors in Collateralized Debt Obligations (CDOs), a pool of bonds and loans with varying degrees of risk.

Hedge funds could take the biggest losses from CDOs while banks could lose from $5 billion to $15 billion, according to the Zurich-based bank.

Credit Suisse found that the maximum potential losses on CDOs are about 10 percent of the $513 billion of the equity capital of the 10 largest investment banks in the world. In comparison, investors put about $227 billion into hedge funds and mutual finds in the first quarter, according to Credit Suisse.

Subprime Losses Could Top $50 billion

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