Sub Prime Woes Spreading

New Century Financial (NEW) saying on Friday it's facing a federal criminal probe, HSBC Holdings (HBC) booking $10.6 B of losses on bad loans and an analyst downgrade on Countrywide Financial (CFC).

New Century, the biggest lender specializing in mortgages to people with poor credit records or heavy debt burdens, plunged 62% today.

Fremont General slumped 22%, Accredited Home Lenders lost 24% and NovaStar Financial declined 30%.

Countrywide Financial, the largest U.S. mortgage lender, fell as much as 6.8%.

New Century said in last week's filing it had 16 credit lines and other financing agreements totaling $17.4 billion.

As of Sept. 30, New Century had a $3 billion credit line with Morgan Stanley, the second-largest securities firm by market value, and an outstanding balance of $1.5 billion.

New Century also had $2 billion of credit with UBS, Europe's biggest bank and $1.5 billion was outstanding as of Sept. 30.

Other backers include Goldman Sachs, Credit Suisse, Bank of America Corp., Barclays Plc, Bear Stearns Cos., Citigroup Inc. and Deutsche Bank AG.

Spreading to prime... Humm, 1.5 + 1.5 = $3 Billion, that means the remaining $14 Billion is divided amongst the other 7 backers...

Money sez each backer is in for an average of $2 Billion... food for thought.

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