By: Kleer These articles were published in the Straits Times today: IMF warns subprime crisis losses 'may be higher' The United States subprime mortgage crisis will likely produce deeper problems than expected because not all market players have 'come out clean' about their losses, the International Monetary Fund said. 'Some analytical work modelled on conservative assumptions suggests that potential losses may be higher and further capital injections are likely,' Mr Manmohan Singh and Mr Mustafa Saiyid wrote in an IMF report. 'Most banks in the United States have not yet marked their assets to genuine transaction prices,' the report said on Wednesday. Some market participants 'have come out clean such as a few US hedge funds that have written off the value of all junior notes issued by its structured vehicles,' the report said. The global markets turmoil that erupted last year amid rising defaults on US subprime mortgages was in part due to a lack of appropriate measures to evaluate the risk of new financial products. Subprime mortgages - home loans given to people with poor credit histories - were packaged into structured securities such as collateralised debt obligations, of CDOs. Following the collapse of the US subprime market in mid-2007, market worries about the exposure of the structured securities to the subprime crisis caused a credit freeze that made many market players use valuation models that no longer worked in the meltdown, the report said. Read more...