BIG BROKERAGE FIRMS LOSE BIG BECAUSE OF LOSSES IN INVESTMENTS BACKED BY SUBPRIME DEBT
Merrill Lynch reported recently its 2007 statistics. The new boss announced $15 billion in subprime mortgage write-downs and a fourth quarter 2007 loss of $9.91 billion. Citigroup recently made similarly stunning write offs and other major brokerage firms are in the same boat.
The Associated Press notes that, by posting significant fourth quarter losses, “Merrill Lynch joins rival Wall Street investment houses Morgan Stanley and Bear Stearns Cos. in posting losses in the last three months of fiscal 2007. Citigroup Inc., the nation’s largest bank, reported on Tuesday a quarterly loss of almost $10 billion, the largest in its 196-year history.” The article also noted that Merrill’s stock fell around 50% in 2007.
All of these companies are toying with layoffs, bailouts from foreign investors, and other uplifting alternatives. All of the companies point to the CDO and subprime debt debacle as the cause of their woes.
http://www.nytimes.com/aponline/business/AP-Earns-Merrill-Lynch.html?scp=5&sq=subprime
