Uh-Oh: Put-Back Exposure Estimates are Rising

One important estimate of what mortgage put-backs will cost banks just leaped by more than 20 percent.

Tom Grill | Photographer's Choice RF | Getty Images

Paul Miller of FBR Capital now estimates that banks will face between $54 billion and $106 billion. That’s up from his September estimate of $44 billion to $91 billion.

The banks that have the greatest loss exposure, according to Miller, are Bank of America, Citigroup, JP Morgan Chase and Wells Fargo.

“The increase reflects that liabilities will rest with issuers of the securities, the analyst wrote today in a note to investors. Miller also said his new estimate reflected banks disclosing more about possible losses,” Bloomberg reports.

“We know this range is excessively wide and that most readers will circle the high end of the range as the most likely loss estimates for the industry,” Miller wrote in a note quoted by Bloomberg. “Ultimately, we do not believe that losses will be as severe as many investors expect, and repurchase losses should be manageable even in our worst-case scenario.”

So Miller’s still a put-back “dove.” But now even the doves estimates of put-back costs are rising.

Companies mentioned in the post

Bank of America


JPMorgan Chase

Wells Fargo


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