a very concise description of the method used to pull off this gigantic banking hoax can be found in "The Money Masters" film on the internet on Google. It is also described in minute detail in their FAQ's under the topic, "What caused the US housing collapse."

victor compton, Cherbourg, France

When is the Government going to realize that tightening the credit market is only making the current problem worst. There are many people wanting to spend but can't get the credit. This type of thinking is how we got into the great depression and they are sending the economy into one because of the tightened credit market.

Keith, Kissimmee, Florida

slc - I wondered this too. My understanding is that the IMF figure includes a) assets of savings & loans that have gone to the wall due to bad debt, and b) the total value of portfolios of financial instrutments that have been "poisoned" by mortgage backed securities from the sub-prime sector.

Simes, Sevenoaks,

Just give us more cheap money! Then I can go buy a bigger plasma screen on the never-never to support the economy.
(Repeat ad-nauseum)

Dave, London, UK

It would be very positive to provide the source of this item. Analysts is just too vague?

Mario DellOro, Milan, Italy

Doubtless these losses are after the bankers have taken huge bonuses for their fine performance?

Carl, London,

I seem to remember that a certain large city firm in London gave out £8-billion in Christmas bonuses the other year, enough to pay for the entire 2012 Olympics.

Wonder where they got the money from?

As far as I can see the Financial Institutions are on a win-win situation. They can gamble with other peoples money and win, but if they lose the just get Tax -payers to bail them out. Again, not their money.

Bry Barnes, Somerset, Uk

a good and concise analysis of this current fiasco can be found by going to the internet film, "The Money Masters" on Google. Under their FAQ's, read the heading, "What caused the American housing collapse." It explains in detail "fractional reserve" lending which is the one trick pony the world banking system used to bring us into The Great World Depression of 2008. As a money changing bureau told me last week when I asked him, "Is business better for you when the economy is ticking over smoothly without crises, or when everything is in turmoil?
"That's an easy one!" he replied. "In times of trouble we make LOTS more profit. If there isn't a crisis, it is hardly worth it to be in the business of money changing."
Citi bank and the others have lost no money. They have put it all away for themselves, quite nicely hidden, and then got us to repay their "losses." Just like burning a building for the insurance, after everything valuable has been removed. Send "em to prison.

victor compton, Cherbourg, France

Some good posts here. One good point was 'protect yourself'. I'm not a doomsdayer but people need to start putting their finances in order for a rainy day. Oil prices, energy, inflation risks etc. I think it's time that society got back to basics and remembered that bear markets exist and we have a responsibilty to our children. The last decade has seen a mass of debt taken on to inflate false standards of living and fuel this obsession with status and beating the Joneses.

Kv, London,

Well, "Smitty from Seattle", Paul Volcker recently endorsed Barack Obama's campaign for president.

David, San Francisco, California

To all Board members, stock holders and other investors;

You brought this on yourselves. Take what you want, but pay for what you take,... and the bills keep rolling in.

Randall, Shelton , USA/WA

Mr. Hulton or eure. This is about as much Bush's fault as it is yours! Bush didn't appraise homes at more than their value to make the loans fit the bank's requirements. Bush didn't sell those same loans to other bigger banks on the secondary market who never even saw the property, but just took it for granted that it was worth what the original lenders said it was. Bush never forced these homeowners to sign a purchase agreement they couldn't afford in the first place. And by God Bush better not bail these people out for their own stupidity!!..nor should congress!! Perhaps in your country they'd do that instead of letting the free market take the beating for their stupidity. Then again...thats why you have your own problems...and thank goodness you've now got Sarkozy to steer you away from the same socialist errors that got him elected in the first place!

Murph, Madisonville , USA/KY

Its just a pity Mr Bush doesn't realize the full implications of the credit crinch.

stephen hulton, eure, france

Thank you slc for raising a very valid point which has been troubling me for some time. Surely somebody somewhere should be able to come up with a logical explanation. Not being an economist but rather a simple engineer (retired), the reason is just beyond my analytical capabilities!

Brian, Hamburg

brian, hamburg, germany

Don't worry, folks. Barack Obama's Hope-and-Change Express will save us all.

Smitty, Seattle, WA

If Citi is having all of these problems then why did they buy my good loan from ABN Amro. Looks like Citi is pulling a fast one on the american public to write down everything then get the Fed to give them cheap money.....it isn't going to filter back to the public.

Randy, Seattle, WA

This 1st qtr loss was predicted and reported on months ago. This isn't news .

Phil, Hackensack, NJ

While this fiasco has hurt anyone who holds mutual funds, stocks, etc, it does not break my heart that those buggers on Wall Street (and other financial centers) are eating the losses. The old say about Bulls, Bears and Pigs holds true-

Frederick Harlass, EL Paso, Texas, USA

Only Ron Paul as President and a return to the gold standard will
solve this mess.

Tom Easterling, New York, NY

This revelation is part of the scheme known as trickle-down transparency, which is: Don't ask, don't tell, but if you ask we'll only tell you a little. There are many trillions of dollars of worthless leveraged financial instruments of fraud and scamming out there yet to be "disclosed." It's all going very slowly because a complete disclosure would probably result in a populist uprising, anarchy, and quite a few heads rolling from the guillotine.

Dayahka, Aberdeen, USA

The Banks and other financial institutions will also be able to reduce their corporate tax exposure by posting a loss.

CID, Ft Lauderdale, FL

Michael Anthony of Birmingham, you are correct. Here in America the financial news channels always spin the information in way that keeps most people in the dark about what is coming. This is just the tip of the iceberg.

Daniel, Los Angeles, California Republic

Since the FDIC was formed no one has lost money from an insured bank. Bank is such a broad term and means so many different things.

david , Tulsa, OK/USA

Solving the current CRISIS will not be accomplished by protecting the very people who caused the problem. This list includes banks, mortgage companies, the stock markets, large corporations that benefited from the real estate financing, the many builders who have overbuilt the suburbs and urban areas, creating new slums, etc. What I would like to see is some presidential candidate come out and condemn these white collar crooks, promise to prosecute and bankrupt them; and then put forth the only solution that will bring about the financial healing necessary to bring America back from the brink of destruction - AND THAT IS TO REBUILD THE WORN OUT INFRASTRUCTURE: BRIDGES, HIGHWAYS, AND ALL THE UNDERLAYING IMPROVEMENTS THAT ARE NEEDED TO BRING AMERICA BACK INTO THE 21ST CENTURY.

David, Indiana,

The amount of revolving debt (ie credit card) in the US is $900 billion - about $3,000 per person Even adding in all non-mortgage consumer debt (ie cars etc) you only get to $2.4 trillion or $9,000 per person. Total mortgage debt is $10.5 trillion or about $35,000 per person. There are many sources for this data so let's not get carried away. None of these numbers is that high compared to other developed countries, particularly once per capita GDP is considered.

RLW, New York, US

There's an old Chinese saying: A good thief never works his own neighborhood. Apparently, these thieves never heard this one. What they intend to do is foist off the bad paper on taxpayers so they can keep their ill-gotten gains. Its called socializing the costs and privatizing the profits. Old game in captialism, actually. The problem is not just bad loans, but the fact that a bad loan is multiplied several times over by leverage. Jim Rogers has said that the underlying tangible assests of the world aren't sufficient to underwrite these deals. Thus, its all been a game of Fantasy Finance, perpetrated by gray suited grafters. They've been caught out, but the resolution to this is going to take a long time. It took 3 years for the markets to bottom out in the Great Depression. Figure on it taking that long again, get out of the stock markets, pay off your debt, and live simply. Oh, by the way, Citi was involved up to its eyeballs in crooked Enron deals. Get the idea now?

Dr. Anthony Absaroke, Ellensburg, USA

This is just the tip of the iceberg so to speak. Just wait until the these same baks can no longer hide their consumer credit card losses. There is over $7 trillion in consumer cresit card debt outstanding (a third of which is interest and punative charges, all of which inflate baks earnings). Look for another $1 trillion in potential writeoffs for these banks.

Herb Siegel, Long Beach, NY

Several years ago, Bill Gross (PIMCO), Warren Buffett (Berkshire Hathaway) and Sir John Templeton all warned of the housing bubble and the potential damage it posed to the global economy. Interestingly enough, they were ignored by Alan Greenspan, the White House, the gurus of Wall Street and the rest of the worldwide financial community.

Dwayne, Culver City, CA, USA

To Jack in Indiana - I read an article the other day describing cases where the banks were not actually taking possession of foreclosed properties in order to avoid the taxes - essentially abandoning the property (not sure I understand how that works).

A lot of the blame for this lies with government demands that mortgage portfolios reflect more "diversity". So credit standards were loosened to increase lending to "the poor" (credit problems, minimal down payments, loans in areas with declining property values). Add that to lots of "get rich quick" schemes and speculation (Flip That House!) and we have a mess.

NB: the bank executives, government regulators, and politicians are still getting their fat checks.

Robert T, Overland Park, KS

To slc, del city, ok........The banks have and will surely continue to pull the wool over our eyes. The CEOs have already left with our money and now Citi has "sold" $12B of bad paper. Guess who financed it? Is the new paper now AAA again or was it ever downgraded before? Sounds like Enron to me. The only difference is our Fed is now condoning it. Protect yourself!

RW, Moneta, VA

I agree with SLC from OK. this smells like a scam and the media doesn't help because rather than exxplain things like ryan from NY is doing they just cheerlead with attention getting statements.

Art Laramee, surprise/AZ, USA

Subprime was only the spark that ignited the fire. The initial prediction was the subprime woes would be contained. That's where the experts were wrong. Financial institutions are de-leveraging their counterparty exposures. The credit default swap market mushroomed from 700 bn USD in 2000 to 45 trillion USD in 2007. Because of this counterparty exposure banks are so weak that rumor and short selling can force a major bank out of business. Bear Sterns is a case in point. JPM, one of the largest financial institutions in the World has 91 trillion USD derivative contracts outstanding that compares to assets of around 1.3 trillion USD (capital base is roughly 100 bn USD). Bear allegedly had more than 2 trillion USD in derivatives outstanding. Banks are overwhelmed by this leverage and in the face of a rapidly slowing economy they have to continue deleveraging. IMF's 945 billion dollar seems possible.

Alfred, Jersey City, NJ

'Level III' assets. This was predicted some time ago by Jim Rogers.

Let the fun begin!

Jenny, London,

I think slc, del city,ok.,is on to something. Its bad BUT this is cyclical and in every cycle its always" the worst ever". The banking/money industries also seem to think people are dumber than a herd of chickens, as my dad would say.

Betsy Guillaume, Livermore, CA

If the banks foreclose and own the homes, will they be able to pay the personel property taxes? The banks during the depression took back farms and asked the farmers to just pay the taxes and keep on farming the farms. The banks could not pay the taxes so it would cause problems for all the schools,towns which are operated on the property taxes. So, it is not just a case of bailing out banks it goes deeper than that if the property taxes are not paid. Take a good look at the county tax budget and look who receive the tax dollars...School teachers, all employees of the cities and counties.

Jack Lynch, Knox, Starke county Indiana

Well said Brian D. But I think the day of reckoning has arrived and the ability to keep this house of cards, that the bankers have made, from collapsing is no longer an option.

IMO the large leverage used is going to take a long time to unwind and its effects wil continue to be felt worldwide.

Kent C, Lady Lake, FL

America is on a path to self destruction unless the people of the country wake up to these non sensical policies. How about drilling for oil, building nuclear energy, building refineries. If America ever start acting like a prima donna in these areas, the deficit would be reduced, the dollar would strengthen an America would be put on firm footing.

mark, huntington,

The IMF report of $945bn included non-residential sub-prime. Residential sub-prime losses were estimated at $565bn. I agree it sounds high. Some of the losses arise from the cost of financing ordinary mortgages because of high credit costs. I've also heard reports of fraud - some of the properties don't exist.
It sounds high but the real losses are even higher due to the weakness of the banking system - 1% off global growth, or 1% of everything! $5tn maybe.

Mark Burton, London, UK

The world is starting to realize that the American financial system is nothing but an extremely complex but ill managed pyramid scheme. As we fight to maintain our standard of living, more and more outrageous schemes will be required to supply capital. Unless of course the people stand up and say enough.

Brian D, Liberty Lake, Wa

Someone explain to me how 675,000 forclosures in 2006 & 2007 and the forclosure rate slowing for 2008, so, say 1,000,000 forclosures over three years; how does that total up to $945 Billion, is the average sub prime mtg @ $945,000.; or are they writing off their anticipated interest profit....and what about recovery, aren't the homes resold or held in inventory....a very small percentage of mtgs written over the past 10 years face forclosure .....I think the banks are pulling the wool over our eyes.

slc, del city, ok

And the people will continue to vote for the same criminal politicians who helped create this mess.

Carla, San Francisco, CA

The writedowns are for assets they are holding that they cannot value. Eventually this problem will solved and we will see all these banks eventually "write-up" these assets as they will be able to value them. Per accounting standards these banks must be able to prove a value for these securities and right now they cannot give an accurate number, so they have to value them as worthless.

Ryan, New York,

I don't really understand the relationship to losses, profits and the companies' value. Are they going to go to the wall due to this? Will they be bailed out? Will they be bought out? All of this is just numbers. Most companies in differing market sectors with similar losses would go under yet Citi still remain. Please put this in context.

charles, Cirencester, Great Britain

As Peter Schiff is so fond of asking, "When's the last time you saw just one cockroach?" The bottom has not yet been seen because it is about to fall out...

Jeff, Albuquerque, USA/NM

So they just realised another $15 billion is missing.Do they have any real money?

stephen hulton, eure, france

And those people who assert that everything is fine, and that we've turned the corner -- well, how hollow do their words sound now? There's much more carnage ahead.

Michael Anthony, Birmingham,