Yep. And that was in Orange County.
But I have read that these “securities” were being sold as “risk free” as I remember. Only problem is that none of this “stuff” has been marked to market. Isn’t that what has happened here? This bank was made the call to just come totally clean and be done with the stinking mess. One major mess, and they are done. I don’t believe that ANY American bank has done the same.
Yes the are in effect being marked to market at a value of 10% of what they were bought for
The bank is pledging to hold reserves equal to 90% of the value of these American CMOs to make their balance sheet healthy
I think they were sold as AAA, which means pretty close to zero risk of default. Other types of risks aren't covered by the AAA rating. AAA rated securities can go way down in value, but its not supposed to be because of defaults in the underlying pool.
As far as the American banks go, its hard to tell. Some have been taking some big kitchen sink write-downs, but probably not all. Toward the end of the 1990-91 session, the surviving banks had overdone some of the markdowns and were able to book recovery markups. You're probably right that not everyone has come clean.
I thought it might have been Orange County. Thanks for jogging my memory.