Pimco's Gross Says Mortgage Write-Downs To Hit $1 Trillion

Bill Gross of Pimco, perhaps the most famous bond investor in the world, says that bank write-offs for mortgage-related paper are far from over.

In a note today he said "PIMCO estimates a total of 5 trillion dollars of mortgage loans are in risky asset categories and that nearly 1 trillion dollars of cumulative losses will finally mark the gravestone of this housing bubble."

Gross's concern is broadened by his statement that banks will have to raise money or sell assets to fill in the trillion dollar hole.

If the Pimco evaluation is right, US banks have several hundred billion more dollars in losses coming. That means a lot of money center banks will have to bring in new cash.

Banks have rallied recently, but the Pimco analysis says they have not seen their lows.

Douglas A. McIntyre