Worries grow about the true value of repackaged debt

The Financial Times reports:

As head of the financial stability unit at the Banque de France, Imène Rahmouni-Rousseau trav-   elled to America this month to look at the current turmoil in the US subprime mortgage world.

Although initially that had seemed an all-American saga, Ms Rahmouni suspected that French and other European investors also held assets linked to subprime securities. So on behalf of her central bank she wanted to assess the risks.



What she discovered surprised her. There was little confidence about how to value the holdings. “Pricing data are difficult to obtain,” she says.

It is a discovery being shared by numerous other policymakers and investors around the world as the fallout widens from a subprime lending boom, in which US banks provided vast amounts in home loans to financially stretched borrowers who put little money down and gave no proof of income. Among the casualties have been two hedge funds run by Bear Stearns, the Wall Street investment bank.

Thanks to Instapundit.com for the heads up on this one.