More earnings fallout from the mortgage mess
Meanwhile, Ambac Financial Group reported a 27% drop in second-quarter earnings. Ambac is a bond insurer -- when an issuer sells bonds, Ambac provides insurance to the bond buyers that they'll be made whole in the event of default. It may be forced to cover payments on securities if defaults rise, and it is taking losses on its own securities holdings. Mark-to-market losses on CDOs with subprime mortgage bonds in them cost it $56.9 million, according to Bloomberg. The stock was down 14.5% this year through yesterday and it too looks weak in the pre-market.
Last but not least, Japan's Nomura Holdings reported a loss of 31.2 billion yen ($258 million) on its U.S. subprime lending business. Nomura is a major buyer and securitizer of subprime mortgages. According to Bloomberg, CFO Masafumi Nakada said: "We kept reducing our position rapidly, but the market's deterioration was faster."
Bottom line: The "hits" just keep on coming.