Wall Street banks are facing a “systemic margin call” that may deplete banks of $325 billion of capital due to deteriorating subprime US mortgages, JPMorgan Chase & Co, has said in a report. JPMorgan, which sent a default notice to Thornburg Mortgage Inc after the lender missed a $28 million margin call, said more default notices and margin calls were likely. The Carlyle Group’s mortgage fund also failed to meet $37 million in margin calls this week. “A systemic credit crunch is underway, driven primarily by bank writedowns for subprime mortgages,” said the report. “We would characterise this situation as a systemic margin call.” The credit crisis that began about a year ago will likely intensify after Friday's weak February US employment report “that most definitely signals recession”, JPMorgan said.
