Subprime financial toll

Reports Suggest Broader Losses From Mortgages

Business
Reports Suggest Broader Losses From Mortgages
By VIKAS BAJAJ and EDMUND L. ANDREWS
Published: October 25, 2007
Economists say mortgage market troubles could, all told, cost financial firms and investors up to $400 billion.

Excerpt:

At this juncture, economists say the troubles in the mortgage market could, all told, cost financial firms and investors up to $400 billion.

That is far more than the roughly $240 billion cost, adjusted for inflation, of the savings and loan crisis of the early 1990s, according to estimates of the combined financial toll of that crisis on both the federal government and private sector. The loss in total real estate wealth is expected to range from $2 trillion to $4 trillion, depending on how far home prices fall, according to several economists.

That would be significantly less than the losses suffered by investors in the stock market collapse earlier this decade, which erased more than $7 trillion, or about 40 percent, of market value.

Experts caution that these estimates are preliminary and the total costs could get bigger still. They also note that the loss of real estate wealth could prove more damaging for the general public than falling stock values because more American families own homes than own stock.


Comment: Consider earlier CFG posting: Subprime fallout!