American banks reeling under pain
Wednesday, 18 June 2008
Fazle Rashid from New York
THE US economy is the biggest and the most robust in the world. This is an indisputable fact. The global economy revolves round it. This is no more the case.
The unexpected reverses in the subprime lending have had disastrous impact on the reputed American banks. They are reeling under the pain and looking to Arab nations flush with petrodollar to salvage them. The banks reaped rich harvest a year ago. But now the profits have vanished. Seven reputed American financial institutions recorded a whopping $254 billion in profits together in three years between 2004 and 2007. The downhill slide began last July.
The banks together have written down the value of their assets by $107 billions. The banks that took the battering are Bank of America, Citigroup, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Glodman Sachs and Morgan Stanley. The ' tally of losses keeps on growing, many bank executives and the shareholders keep asking the same question.
When will the pain end? The US banks have been forced to declare redundancies. Analysts say the threat to the US economy have dissipated due to massive government efforts at rescuing the economy. Lehman Brothers are reportedly preparing to disclose a quarterly loss of $2.8 billion. Goldman Sachs, Bank of America, JP Morgan Chase and Merrill Lynch will announce the results of their performance shortly.
Citigroup, Merrill Lynch and UBS are likely to see lowering of their ratings. Citigroup and Merrill Lynch have written down $37.3 billion and $32.6 billions respectively. This will have a serious consequences for the economies across the world including that of China and India have been able to avoid the crisis but in the ultimate analysis the two cannot escape.
THE US economy is the biggest and the most robust in the world. This is an indisputable fact. The global economy revolves round it. This is no more the case.
The unexpected reverses in the subprime lending have had disastrous impact on the reputed American banks. They are reeling under the pain and looking to Arab nations flush with petrodollar to salvage them. The banks reaped rich harvest a year ago. But now the profits have vanished. Seven reputed American financial institutions recorded a whopping $254 billion in profits together in three years between 2004 and 2007. The downhill slide began last July.
The banks together have written down the value of their assets by $107 billions. The banks that took the battering are Bank of America, Citigroup, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Glodman Sachs and Morgan Stanley. The ' tally of losses keeps on growing, many bank executives and the shareholders keep asking the same question.
When will the pain end? The US banks have been forced to declare redundancies. Analysts say the threat to the US economy have dissipated due to massive government efforts at rescuing the economy. Lehman Brothers are reportedly preparing to disclose a quarterly loss of $2.8 billion. Goldman Sachs, Bank of America, JP Morgan Chase and Merrill Lynch will announce the results of their performance shortly.
Citigroup, Merrill Lynch and UBS are likely to see lowering of their ratings. Citigroup and Merrill Lynch have written down $37.3 billion and $32.6 billions respectively. This will have a serious consequences for the economies across the world including that of China and India have been able to avoid the crisis but in the ultimate analysis the two cannot escape.