S&P Ramps Up Mortgage Downgrades

Wall Street Journal (01/31/08) P. A3; Lucchetti, Aaron; Ng, Serena
Standard & Poor's this week downgraded or threatened to downgrade more than 8,000 mortgage investments--a move that could impact regional banks, credit unions, government-sponsored enterprises and some European and Asian banks that have not already taken big write-downs. While not all of the bonds downgraded or put on watch will produce losses, the actions signal the potential for an even more pessimistic outlook that initially expected. S&P is projecting that a widening array of financial institutions will ultimately face mortgage-securities losses totaling more than $265 billion. S&P economist David Wyss, meanwhile, forecasts that U.S. home-price declines could top 13 percent by the end of this year and that the housing market will likely not bottom out until at least the first quarter of 2009.