The International Monetary Fund Monday stood by its prediction of a 1-trillion-dollar total loss for financial institutions stemming from the one-year-old credit crisis in the United States - more than double the writedowns reported by banks and mortgage lenders to date, according to dpa. Warning that there was "no bottom" in sight for the housing downturn at the centre of the ongoing turmoil, the IMF, in an update of an April report on financial market stability, said banks had done well to raise extra capital in the current environment. Banks had already acknowledged much of their expected losses from the financial turmoil, reporting more than 400 billion dollars in writedowns since August 2007. But the IMF said it saw "little reason" to change its April estimate that total losses would reach 1 trillion dollars before the crisis comes to an end. "Credit risk remains elevated. Further raising of capital may be needed," in some financial institutions, said Jaime Caruana, director of the IMF's Monetary and Capital Markets Department. Caruana said banks' balance sheets remained under stress and added that he saw no significant signs that the weak housing market which sparked the current financial turmoil was set for a turnaround. "The (housing) indicators are still not clearly pointing to a bottom," he said. Plunging housing prices since early 2007 have led to more than a million foreclosure filings by US homeowners, which in turn has led banks and lenders to sharply devalue their mortgage-related assets. The US mortgage crisis has ignited a wider economic downturn in much of the industrialized world as banks have restricted credit availability. The IMF warned that risks to emerging economies were also rising as developed countries have cut back on external financing. Strong inflationary pressures from rising food and energy prices are also testing monetary policies around the world. "Policy trade-offs between inflation, growth and financial stability are becoming increasingly difficult," the IMF report said.
