How much of the subprime losses remain to be booked?

[maxpi]

Quote from moo:

This very small portion is still larger than the banks' total equity capital. So subprime alone is enough to bankrupt the whole system.

BofA was technically bankrupt for a long time after bad loans to South America, they had only half the required reserves allowed by law but noboby shut them down, it was better to let them work their way out of it, less disastrous for the economy..

Regarding people walking away.... only if the payment is more than they can make or it is poor in comparison to renting.. my house value went to essentially zero due to demographic shifts in the area. I stayed in it, still am in it, the payment was good compared to rent and there were lots of family reasons to stay put, my daughter had a zillion friends, we all had friends and associations, so we stayed put, the value returned in the next cycle, most people are somewhat aware of the cyclical nature of housing prices ........

 

[moo]

Quote from scriabinop23:

In that case, the lossses won't be so bad. Those same people clearly showed they don't have much sense when they levered up w/ money they didn't have and often committed double on their monthly nut (in buying and levering) versus just renting. Likely they won't get any sense between now and then, and will just pay off their debts.

They either can not or do not want to pay. Even Americans are not that stupid that they will want to hold a depreciating asset with negative equity, when they can just walk away, declare bankruptcy, and move to live somewhere else where rent is only a fraction of their current mortgage payments.