RE: cibc and sub primeThe difference in the $300 mm or $2 billion may be the type of subprime exposure.
There are basically two kinds.
Warehouse facilities - This is where a bank provides a revolving loan directly to a Subprime lender and then that debt later gets collaterized and the warehouse facility gets repaid. The bank gets paid by charging a set-up fee as well as interest. Although not directly linked, it is implied that the bank's securities arm is part of an underwriting syndicate that sells the collaterized bonds. I believe CIBC's stated "exposure" relates to direct loans to Subprime guys.
Collaterized bonds - These are just direct investments. It is possible that "$2 billion" figure relates to direct ownership of bonds in the banks proprietary trading accounts. It would seem unlikely that CIBC would have $2 billion in warehouse facilities - that would be way too much risk.
In either case, and in the vast majority of cases, these securities are always priced at purchase price. The market for collaterized bonds is actually very illquid. These bonds generally have shortish maturities (many mortgages are only for 5 years and there is always refi risk).
I certainly don't know if CIBC has $300 mm or $2 billion in total exposure, but I hope this helps explain the possible difference. The bad reality is that a writedown is coming (whether meaningful or large). Depending on what type of collaterized bonds CIBC has the write-off cannot be guessed. The highest quality stuff (AAA) probably only declined 5%. The worst grade (BBB) probably down 50% if it was properly marked-to-market.
I wish CIBC did a purge and make the appropriate writedown now - to remove the uncertainty. My own guess...(and its only a wild one) it a write-down of around $200 mm after-tax (or $0.59). That's a big number on surface, but its less than 1 quarter of earnings. The publicity is more damaging than the actual loss (assuming it was that). I mean the stock fell $0.81 just today, but was already down last week on talk of Subprime woes.