A 95% Off Sale At Big Banks (JPM)(UBS)

Banking, finance, and taxes

Published: March 24, 2008 4:53 am

For reasons that are not entirely clear, JP Morgan (NYSE: JPM) filed detailed information on the valuations of securities held by itself and other banks with a court in Canada. According to the FT "Some securities have lost almost a third of their value – even though many were considered to be so safe that they carried top-notch ratings from the credit ratings agencies." That would be another black eye for Moody’s and S&P, but with only two-eyes per person, the firms are running out of real estate.

Actually, the Canadian courts needed the numbers to get at the value of twenty structured investment vehicles, but JP Morgan does not seem to have fought very hard to keep the numbers private.

The most astonished set of figures to come out of the filings was that "some subprime mortgage-linked securities issued by groups such as UBS (NYSE: UBS) have lost almost 95 per cent of their value."

Regulators and auditors are likely to get their hands on this data and that could influence how they look at assets from other banks. That may be hard on the furniture.

Douglas A. McIntyre

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