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Tuesday, February 19, 2008

Credit Suisse, Lehman Write-downs

by Calculated Risk on 2/19/2008 02:28:00 AM

From Reuters: Credit Suisse says writing down $2.85 bln

Credit Suisse said it was marking down asset-backed positions by $2.85 billion, which would wipe off $1 billion from its net income, but the bank would remain profitable in the first quarter.

Credit Suisse said on Tuesday an internal review which had identified mismarkings and pricing errors by a small number of traders in its Structured Credit Trading business was continuing.
From the WSJ: Now, Lehman Gets Pelted
... credit markets have worsened, and Lehman believes it is now facing a write-down in the $1.3 billion range, according to people familiar with the matter.
Nearly $39 billion [of debt securities and loans that are potentially vulnerable to markdowns] are commercial real-estate loans. Even as it cut way back on making home loans, Lehman continued to lend to buyers of office buildings and other assets. In the fourth quarter of fiscal 2007, ended Nov. 30, Lehman originated $15 billion of commercial mortgages, in line with the average origination in the previous three quarters.

Yet, the firm only sold off $1.5 billion of those loans, compared with more than $10 billion in the third quarter. As a result, its commercial-mortgage holdings have swelled. Now, analysts wonder how much they will have to be marked down.
The confessional is open. And the CRE lenders are queuing up.