Picking on IB would probably be unfair here without any evidence, but my getting spooked by E*Trade was real enough -- I kept copies of these wire alerts --
E-Trade shares fall 22%
By Greg Morcroft
Last Update: 1:01 PM ET Aug 16, 2007
NEW YORK (MarketWatch) -- Shares of online financial services firm E-Trade Financial (ETFC) slumped 22% Thursday afternoon as investors grew increasingly wary of the company's mortgage holdings and there was pressure on the stock from heavy negative sentiment in the options market. Earlier this week, Citigroup analysts said, "We view the lack of any new meaningful disclosures around the composition and quality of the $28 billion mortgage portfolio as concerning." The analysts estimated that net unrealized losses grew to an all-time high of $335 million at E-Trade. It added that it would be difficult for E-Trade to refinance the portfolio without taking a meaningful earnings charge.
E-Trade discloses new mortgage data to try to calm investors
By Alistair Barr
Last Update: 5:29 PM ET Aug 16, 2007
SAN FRANCISCO (MarketWatch) -- E-Trade Financial Corp. (ETFC) disclosed more information on its mortgage holdings late Thursday to try to calm investor concerns. The discount broker also said that it's so far seen no material changes in the availability, pricing or margin on its wholesale funding sources, including repurchase agreements. "Management maintains that it does not believe that the current market capitalization accurately reflects the financial strength and performance of the business," E-Trade said in a statement. The company's $15.7 billion first-lien mortgage portfolio contains home loans with high credit scores and low loan-to-value ratios, plus private mortgage insurance, E-Trade explained. The company noted that $9.2 billion, or 74%, of its home equity portfolio is tied to loan to borrowers with credit scores of at least 700. E-Trade also disclosed that $12.6 billion, or 99%, of its mortgage-backed securities are rated AAA.
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