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Paul Kiesel
Paul Kiesel
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Subprime Mortgage Mess Crosses the Pacific

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Japanese banks and brokerage firms are likely to report losses tomorrow exceeding $14 billion dollars ($1.5 trillion yen) for the year ended March 31 and this is largely due to the U.S. subprime mortgage crisis, according to Forbes.com.

Eight of the nation’s largest banks are now starting to see their investments slide, as the subprime mortgage crisis spread throughout the country. About $10 billion dollars will be subprime-related losses. Mizuho Financial Group appears to have taken the biggest hit of the eight banks; their subrprime losses will be near $5 billion dollars.

This news will come after another proposal to ease the housing crisis in the U.S. was brought to Congress and the Bush Administration, today. It appears both entities were cool to the FDIC proposal, which would lend $50 billion directly to as many as a million homeowners. The proposal would reduce the principal amount owed on the loan up to 20 percent. The borrowers would have five years before they had to being to repay the government loans. 

Representative Barney Frank is still pushing his plan along, however, it is likely that President Bush will veto it because, even if it passes through the House and Senate (it received committee approval today), it is unlikely to receive two-thirds of the vote to prevent a veto. Rep. Frank’s bill would authorize the FHA to guarantee up to $300 billion in new mortgages offered by government-approved private lenders. The House Financial Service Committee estimates the program could help 1.5 million homeowners who are having difficulty paying their mortgages or who are in underwater mortgages.