December 1, 2007

$50 Billion and counting

Congratulations to E-Trade, it just tipped us over the $50 Billion worth of write downs with its sale of its subprime holdings to Citdal. The book value of those holdings were $3 billion and it was sold for $800 million. That means E-Trade just booked a $2.4 billion loss on its fourth quarter income statement. Ladies and gentleman, with that amount we just surpassed the $50 billion mark of write downs.

I have kept a tally of all confirmed write downs by banks and companies this year to date that have disclosed and reported write downs, you can see it here. Off course there will be more write downs to come in the fourth quarter and those will add to the impressive tally so far.

The average write down came to be just under 9% of banks' equity book value. The biggest prize for a write down of equity book value goes to...guess who, E-Trade. E-Trade wrote down 67% of its equity book value ( $2.4 billion plus $434 million announced with its 3rd quarter earnings). Other honorable mentions, second place holder Merrill Lynch with 22% of its equity book value. The smallest write down of US money centre banks is JP Morgan with only 1.08% of its equity book value.

Those are very big numbers and analysts expect more to come. Lets hope they are wrong; they have been wrong before, they did not see this coming.

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