New from the USA - JP Morgan Chase & Company says that the market value of its investments in Fannie Mae and Freddie Mac preferred stock has fallen by half to $600 million this quarter.
The decline could affect the earnings. However the exact amount of losses for the third quarter was difficult to estimate with the different variations in the share value.
This news came after JP Morgan stated that they would write off an additional $1.5 billion as they were to dig from the subprime mortgage mess. JP Morgan has been among the first of the banks to sound the alarm as the troubles have begun to disturb the home equity loans and mortgages taken out by the most creditworthy borrowers.
There is an expectation that the other banks are also likely to announce problems with the Fannie Mae and Freddie Mac holdings.
Shares in these holdings have fallen because of the credit market crisis. There are questions being posed whether there are enough capital funds. The shares of both the holdings have fallen by nearly 90%, and both the stocks closed at Fannie Mae- $5.19 and Freddie Mac- $3.29.
Banks had started purchasing these stocks i.e. both in debt and equity as these stocks earned more lucrative returns than treasury bills.
A financial services analyst at the Stanford Group says that this will not be a matter of much concern for most of the banks. However, there are many troubling questions on issues like the risk management practices.
The decline could affect the earnings. However the exact amount of losses for the third quarter was difficult to estimate with the different variations in the share value.
This news came after JP Morgan stated that they would write off an additional $1.5 billion as they were to dig from the subprime mortgage mess. JP Morgan has been among the first of the banks to sound the alarm as the troubles have begun to disturb the home equity loans and mortgages taken out by the most creditworthy borrowers.
There is an expectation that the other banks are also likely to announce problems with the Fannie Mae and Freddie Mac holdings.
Shares in these holdings have fallen because of the credit market crisis. There are questions being posed whether there are enough capital funds. The shares of both the holdings have fallen by nearly 90%, and both the stocks closed at Fannie Mae- $5.19 and Freddie Mac- $3.29.
Banks had started purchasing these stocks i.e. both in debt and equity as these stocks earned more lucrative returns than treasury bills.
A financial services analyst at the Stanford Group says that this will not be a matter of much concern for most of the banks. However, there are many troubling questions on issues like the risk management practices.