BBC Business – The unusual move, which includes Bank of America and JP Morgan, aims to boost confidence in and prevent a further sell-off of such investments. Such a sell-off would force banks,brokerages and hedge funds to write down the value of their assets. This could, in turn, further tighten credit markets and hurt the economy.
‘Unwise decisions’
Analysts say the big US banks hope their move will deter the current holders of sub-prime mortgage securities from dumping them on the market at knockdown prices. Such a firesale would further hurt banks’ bottom lines. “Banks made unwise business decisions, and now they’re scrambling to save themselves,” said Steve Persky, chief executive at Dalton Invesments.
Read Complete Article
