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ALL BUSINESS: Credit Woes Spread
Friday February 1, 1:16 PM EST
NEW YORK (AP) — Finding a place to hide out during the credit crisis is getting trickier now that bad debts are haunting some seemingly secure corners of the marketplace.
You'd think nonfinancial companies would be safe from the housing and mortgage market collapse. Not so. Pharmaceutical company Bristol-Myers Squibb Co. took a $275 million charge in the fourth quarter to write-down its subprime-backed investments, and it warned that other companies could face similar problems.
At the same time, there are growing fears over mounting losses at once-reliable bond insurers, which back municipal debt to finance schools and hospitals and riskier mortgage-related securities, too. If they default, it could be another hit to the already damaged banking sector.
"You just don't know how far this mess can go," said Barry Ritholtz, CEO and director of equity research at the investment firm Fusion IQ. "It's certainly not contained, contained, contained."
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Write-downs worldwide over the last year have totaled more than $140 billion, and what has been driving the losses isn't improving. Mortgage defaults are rising as home prices are falling. Standard & Poor's on Wednesday forecast losses on investments tied to mortgages could top $265 billion.
Those estimates don't include surprises like the $275 million charge from Bristol-Myers. That startling write-down can't be overlooked because it exemplifies the depth of the crisis and where problems could begin to hit next
http://finance.myway.com/jsp/nw/nwdt_rt.jsp?section=news&feed=ap&src=601&news_id=ap-d8uhm5c01&date=20080201
Friday February 1, 1:16 PM EST
NEW YORK (AP) — Finding a place to hide out during the credit crisis is getting trickier now that bad debts are haunting some seemingly secure corners of the marketplace.
You'd think nonfinancial companies would be safe from the housing and mortgage market collapse. Not so. Pharmaceutical company Bristol-Myers Squibb Co. took a $275 million charge in the fourth quarter to write-down its subprime-backed investments, and it warned that other companies could face similar problems.
At the same time, there are growing fears over mounting losses at once-reliable bond insurers, which back municipal debt to finance schools and hospitals and riskier mortgage-related securities, too. If they default, it could be another hit to the already damaged banking sector.
"You just don't know how far this mess can go," said Barry Ritholtz, CEO and director of equity research at the investment firm Fusion IQ. "It's certainly not contained, contained, contained."
~
Write-downs worldwide over the last year have totaled more than $140 billion, and what has been driving the losses isn't improving. Mortgage defaults are rising as home prices are falling. Standard & Poor's on Wednesday forecast losses on investments tied to mortgages could top $265 billion.
Those estimates don't include surprises like the $275 million charge from Bristol-Myers. That startling write-down can't be overlooked because it exemplifies the depth of the crisis and where problems could begin to hit next
http://finance.myway.com/jsp/nw/nwdt_rt.jsp?section=news&feed=ap&src=601&news_id=ap-d8uhm5c01&date=20080201