Soros: Global subprime losses likely above $1 trln

By John Parry and Jennifer Ablan

NEW YORK (Reuters) - George Soros, the hedge fund legend and billionaire philanthropist, said on Wednesday the subprime mortgage crisis is likely to cause global losses of over $1 trillion, characterizing the situation as the most severe since the Great Depression.

"Losses being recognized now amount to $1 trillion," from the subprime crisis, Soros said on a conference call when asked about a similar estimate from the IMF.

"I think that is a fair estimate, but that number is likely to still grow," as house prices in some countries including the United States continue to come under severe pressure, he said.

He was answering questions from reporters on a conference call to discuss his latest book, "The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means."

Soros is less fearful about the potential crippling of the American banking system, thanks to the Fed's actions to increase liquidity in financial markets and its role in a deal for JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research) to take over Bear Stearns Cos BSC.N.

"I think the acute phase of the crisis is behind us in the sense that (fears that) the financial system will be allowed to collapse are unfounded," Soros said.

In mid-March, the Fed brokered JPMorgan's take-over of Bear Stearns and also dusted off a Depression-era rule to let securities firms borrow directly through its discount window, which is usually reserved for commercial banks. That has significantly helped restore investor confidence.

Even so, he noted, the financial crisis is beginning to have serious effects on the real economy, adding: "The extent of that is not, in my opinion, yet fully recognized."