Thursday, November 8, 2007
Morgan Stanley announced it would write down at least $3.7 billion due to proprietary trading positions related to subprime mortgage investments (unlike Merrill and Citigroup, whose losses related largely to its underwriting activities). AIG, the world's largest insurance company, said it would write down $2 billion in the third quarter. Analysts had expected a much larger write-down, so the bad news may not yet be over. NYTimes, A.I.G. Takes a Hit of $1.95 Billion on Housing Investments. WSJ, AIG, Morgan Stanley Show Subprime Losses Aren't Quite Over Yet.
Meanwhile, Merrill Lynch confirmed that the SEC was looking into how the firm valued its subprime portfolio. NYTimes, Morgan Stanley Takes a Hit on Mortgages;