Merrill's $15 billion hit; UBS' surprising mortgage admission
"Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost double its original estimate, prompting the firm to raise additional capital from an outside investor.
"Merrill, the nation’s largest brokerage firm, is expected to disclose the huge write-down when it reports earnings next week, according to people who have been briefed on its plans. The loss far exceeds the $12 billion hit many Wall Street analysts had forecast.
"To shore up its deteriorating finances, Merrill is now in discussions with investors in the United States, Asia and the Middle East, including American private equity firms, to raise about $4 billion in the coming days, these people said."
Speaking of UBS, the global bank basically admitted it has no idea how bad the U.S. mortgage market will get -- or how much money it will ultimately lose on its mortgage investments. The complete shareholder letter is available here. The excerpt I'm referring to is:
"We cannot, at this time, accurately predict the future development of US residential mortgage markets and therefore the ultimate impact on our positions in sub-prime mortgage related securities."