real-time news and commentary for investors
Tuesday, Sep 3
Analyst: Worst case MBS scenario for banks is manageable
- Worst-case estimates of legal losses stemming from pre-crisis mortgage sales at the three largest U.S. banks "are clearly manageable," says Drexel Hamilton's David Hilder. His conclusion comes after studying "reasonably possible losses" in the Q2 filings of BAC, C, JPM, and WFC.
- "Initial estimates of mortgage-related losses and litigation settlement costs were too low ... at this point, more than 5 years since the mortgage-driven parts of the crisis began to explode ... we believe the banks' estimates ... are likely to be more accurate than externally-derived estimates."
- Hilder's view is the consensus one, but (surprise) CLSA's Mike Mayo says Bank of American faces billions more in potential losses owing to the challenge to its $8.5B settlement to resolve $107B in investor losses. The Article 77 hearing over that matter resumes on September 9 following a summer recess.