Transcripts

The Dow's Triple Digit Credit Crisis Dive

SUSIE GHARIB: Stocks on Wall Street fell sharply today on new concerns about the health of the mortgage market. The Dow tumbled 214 points and the NASDAQ lost 52 after news late last night that mortgage lender Thornburg Mortgage failed to meet a margin call. Thornburg's stock plummeted more than 50 percent today and quickly led to a sell-off in other mortgage-related shares, including Fannie Mae, which dropped more than 10 percent. Credit strategist Greg Peters at Morgan Stanley says these latest credit jitters are moving away from the sub-prime market and toward prime loans, creating more anxiety in the financial markets.

GREGORY PETERS, CHIEF CREDIT STRATEGIST, MORGAN STANLEY: There's a clear lack of confidence. There's no confidence in ratings. There's no confidence in banks and the dealer community. There's no confidence in hedge funds. And so no one in the market trusts each other. At the same time, what you're seeing is just continued losses out of the mortgage area.

GHARIB: Peters also says that the credit crisis will be more severe and last longer than many expect. He adds that Federal Reserve interest rate cuts are not enough to turn the situation around.