Bankers Take the Spotlight

The uncertainty that caused last week's dramatic stock market swings and central bank interventions will stoke investors' fears for a while, but traders likely will know more next week about the illiquid credit valuations behind the turmoil.

As the dust settles after a week in which the Dow Jones Industrial Average had both its single biggest advance this year and its second-biggest decline, investment banks will likely be working overtime.

The largest Wall Street brokerage firms have been trying to mark to market or determine the market value of illiquid esoteric securities that have gone sour in the ripple effects of the subprime mortgage meltdown.

The uncertainty caused the Dow to fall 387 points on Thursday, and another 31 points by day's end on Friday. But despite central bank liquidity injections and laments on Wall Street that the markets need emergency federal funds rate cuts, the large-cap index remained higher for the week by 0.4%.

In the coming week, many fund managers may see their day of reckoning: July's month-end portfolio evaluations by prime brokerage firms that lend to these funds will include some of these best attempts at valuations. Many investors have pointed to Aug. 15 as a day to watch, as margin calls and collateral requirements issued then could generate some forced selling of more liquid assets.

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