Goldman Sach indicates US's lending to go down by $2t, Bank's credit loss could cross $400b

Goldman Sachs chief US economist Jan Hatzius said that "back-of-the-envelope" calculations indicate the loss for US banks to be more than $400 billion. Earlier this week Germany's biggest bank, Deutsche Bank, had also estimated the losses in the range of $300b - $400b. Jan also predicted decrease in the lending by $2 trillion because of the sub-prime crisis. In his report 'Leveraged Losses: Why Mortgage Defaults Matter' said the macroeconomic implications of these losses 'could be quite dramatic' and still have a heavy impact on lending and overall economy.

``The likely mortgage credit losses pose a significantly bigger macroeconomic risk than generally recognized,''

``A $1 mortgage credit loss could result in a reduction in lending by significantly more than $10.''