Difference between writedown and credit loss
Written on March 14th, 2008 in Definitions
This is just one of our articles referencing the financial crisis, crash of the housing market, subprime, and more:
Definition – the difference btween a write-down and a credit loss:
Investment banks and the investment-banking units of financial conglomerates mark their assets to market values, whether they’re loans, securities or collateralized debt obligations, and label that a “writedown” when values decline.
Commercial banks take charge-offs on loans that have defaulted and increase reserves for loans they expect to go bad, which they label “credit losses.” Commercial banks can have writedowns on holdings of bonds or CDOs as well.
A CDO is a collateralized debt obligation
More Mortgage Crisis Articles Like This One
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