Bad Credit Mortgages take down Wall Street

As the number of people with Bad Credit Mortgages who are failing to make payments rises, the predicted losses for Wall Street looks like reaching half a trillion dollars.

The devastation of such losses could cause banks to re-evaluate and tighten their credit lending on Bad Credit Mortgages, which would then have a negative impact on economic growth for years to come.

Bad Credit Mortgages in the US have lead to many repossessions, which is predicted to result in halving the US growth rate in as little as six months.

The reason that this has happened, is that in order for banks to keep up with the growing number of Bad Credit Mortgages, banks have had to borrow money from credit markets. Already Wall Street banks have recorded losses that total $50bn (£24bn) and the head of the biggest bank, Citigroup, and the head of the biggest investment firm, have stepped down.

Potential Bank Liabilities:
Citibank: $90bn
JP Morgan Chase: $78bn
Bank of America: $58bn
ABN Amro: $44bn
HSBC: $34bn
ING: $32bn
Fortis: $28bn
State Street: $28bn
Wachovia: $26bn

It is also foreseen that many banks have underestimated their potential liability and are looking at sometimes 4 times more than they have actually declared.

The issues caused by Bad Credit Mortgages affecting the US market are likely to spread and it is only a matter of time before we are experiencing the back lash.