JPMorgan QA highlights

--The bottom is not at hand. subprime woes will continue and deepen, beause the subprime loans peaked year-end 2005 and all of 2006. --Most of the borrowers of the roughly $500 billion of ARMs scheduled to reset over the next 18 months. --it is hard to modify existing mortgages --futher declines in home prices will exacerate the default problem --contagion from subprime mortgages is currently a key issue across the credit markets. One possible scenario involves collaterized loan ogligations (CLOs). --CLOs own approximately $300 bi of leveaged loans, representing about 3/5 of all leveraged loans --underlying assets remain very healthy since corporate profits is still strong so credit quality underlying CLOs is dramatically better than the ABS CDOs that invest in subprime mortgages. --the contagion stems from techical factors and from a general repricing of risk across the credit markets --tech factor: massive pipeline, LCD $216 billion of leveraged loans await issuance.