Bank of America announced Tuesday it will take a $3 billion writedown in the fourth quarter to reflect losses in the company's portfolio of mortgage-related securities. The company will also spend another $600 million supporting money-market funds that are exposed to the troubled financing entities known as structured investment vehicles (SIVs -- see related story). CFO Joe Price further commented, "As market conditions change and possibly worsen, there could be additional diminution in value... There is complexity and difficulty in estimating the value of these positions." Investors will watch large banks and brokers write-off as much as $130 billion, including close to $70 billion this year, Deutsche Bank analyst Mike Mayo told clients in a research note. Citigroup, Merrill Lynch, and Morgan Stanley have announced a total of more than $40 billion worth of writedowns. Speaking at a NYC conference, Price told investors capital market disruptions should continue to 2008, and said the firm will not resume share repurchases until at least mid-2008. He said the company's longer-term targets would likely not be met in the near future. Meanwhile, Goldman Sachs CEO Lloyd Blankfein told investors Tuesday he does not expect his firm to take any significant writedowns against its current portfolio (full story). Shares of Bank of America traded 4.2% higher to $45.84.
Commentary: Launching the Super SIV - Getting the Big Things Right • Goldman CEO: No Significant Writedowns, Still Short Subprime
Stocks to watch: BAC, MER, C, , MS. ETFs: IYF, RYF, XLF
Earnings call transcript: Bank of America Q3 2007
Related: What's an SIV?
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