Write-downs now, write-ups later

April 23, 11:36 AMDenver Business ExaminerWill Shanley

Previous Next

1 comment Print Email RSS Subscribe

Subscribe

Get alerts when there is a new article from the Denver Business Examiner. Read Examiner.com's terms of use.

Email Address   Include other special offers from Examiner.com Terms of Use

  The housing market is cratering and the nation's largest investment banks are getting whacked. All told, the world's largest banks and securities firms have reported $247.6 billion in write-downs since the start of 2007, according to a recent Bloomberg analysis.

Lost amid the doom and gloom of these write-downs and lackluster earnings reports from some U.S. companies is the fact that, eventually, "write-ups" could result. That means that in future quarters, be they in 2009 or later, these same banks could "write-up" the value of these assets, most of which are linked to mortgage loans. For that to occur, the current economic malaise must be short and shallow, allowing a majority of U.S. homeowners to stay in their homes, help stabilize home prices and, in turn, bolster the value of these assets.

I don't have a crystal ball and can't say for sure how deep a recession the U.S. is facing. But for those looking for silver-lining in the on-going credit crunch, the possibility of write-ups is one to consider.