Citigroup said last week it would reduce its mortgage exposure by $45 billion. The Financial Times reports that the market was rife with rumors that UBS might sell off a huge chunk of Alt-A loans to PIMCO. So how do banks plan to reduce their mortgage exposure? Selling the risky stuff will not be easy, assuming the liquidity is not there right now. Citigroup says 90 percent of new mortgages either will be securitized or sold to Fannie and Freddie. This may be easier said than done. The market for MBS--even prime stuff--isn't exactly welcoming right now. It's unclear how much more can be sold to Fannie and Freddie. But what else can a bank do right now?  

For more:
- here's some background from the Financial Times

Related Articles:
Credit issues a big top this year? Article
Washington Mutual in the spotlight. Article