Subrime Mess Continues to Worsen
An article published by Reuters talks about the increasing problems associated with the subprime crisis, including the trouble borrowers have to payoff mortgage loans. According to the article:
Blackstone Group president and chief operating officer Hamilton James said on Monday that the subprime mess that hit Wall Street banks appears to be getting worse.
“The subprime black hole is appearing deeper, darker and scarier than they thought,” James said, referring to investment banks. James spoke on a conference call with media after its results on Monday. Blackstone posted a quarterly loss.
James also said investment bankers expect the Federal Reserve to cut interest rates again, as Wall Street has seen the credit market crisis clog balance sheets with hundreds of billions of dollars in leveraged buyout debt.
That backlog will take around six months to play out, James said, with banks having worked through what Blackstone estimates is around 40 percent of the leveraged loan backlog.
Nobody expected the current crisis to get better anytime soon. But at the same time, nobody wants to hear that it’s getting worse. Just as the subprime mess was a long time in the making, the market won’t fix itself overnight. However, it is good to see that the government and involved companies are trying their best to come up with solutions that may stabilize the precarious financial system.
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