Filed under: Industry, Amer Intl Group (AIG), Housing

When Credit Suisse (NYSE: CS) talked about its results last week, it looked like the bank would be distinguished by having very few write-downs of mortgage-related securities making it look smarter than its US or European counterparts. That only lasted a few days.

According to The Wall Street Journal the bank said “first-quarter earnings will be reduced by $1 billion from mismarkings and pricing errors by traders which led to the reduction in the value of some asset-backed securities by $2.85 billion.”

Let’s say it and be done with it. Big banks and financial houses don’t know what they own. This was made clear by AIG’s (NYSE:AIG) surprise write-off last week. Financial companies bought and created structured instruments where the risk was not clear or was poorly understood. Those assets cannot be sold now because of a tremendous slowdown in the credit markets and more subprime mortgage defaults.

Because banks are not sure what they own and what it is worth, the odds that more write-down are coming goes up. Banks would have preferred to cleanse themselves of bad news last year. But, they can’t value what they don’t understand.

Douglas A. McIntyre is an editor at 247wallst.com.

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