Subprime Index Is Overstating Losses, BIS Says

Wall Street Journal (06/09/08) P. C2; Perry, Joellen
The Bank for International Settlements (BIS), known as the central bankers' central bank, says the ABX index that estimates subprime mortgage-backed securities' value might be overstating possible triple-A securities losses by more than 60 percent, mainly because it deals with a small portion of the market and actually handles triple-A securities that are repaid after meeting other triple-A obligations. According to the BIS, the ABX pegged potential mortgage-backed securities losses at $250 billion overall and $119 billion for triple-A securities in May. However, total losses would top $205 billion, with triple-A losses at $73 million, using new calculations.