Bear: Billions More in New Write-Downs Likely

MoneyNews
Friday, March 14, 2008

S&P 500 financial companies are likely to post additional first-quarter write-downs of $35 billion to $70 billion as deteriorating credit markets will require further recapitalizations, Bear Stearns said.
"The current (credit) crisis threatens the stability of the U.S. financial system," analyst Jonathan Golub said.

S&P 500 financials have recognized about $130 billion in write-downs so far, and the sector's market capitalization has fallen by over $763 billion since the end of the third quarter, Golub noted.

"Currently, there is much debate over whether the economy is in recession or soon will be. We believe that the more important issue is the integrity of financial markets," Golub wrote in a note to clients.

The analyst, however, said that both financials and the market will likely end the year higher, despite a number of important hurdles facing the group, including disorderly credit conditions and compromised collateral values.

U.S. financials may recognize write-downs in excess of actual losses that are ultimately realized, Golub said.

http://moneynews.newsmax.com/money/arch ... .cfm?s=mnm