Post by Catdaddy on Nov 13, 2007 12:37:36 GMT -5
BofA to Write Down $3 Billion in Debt
moneynews.newsmax.com/money/archives/articles/2007/11/13/114057.cfm?s=al&promo_code=3CD2-1
MoneyNews
Tuesday, Nov. 13, 2007
CHARLOTTE, N.C. -- Bank of America Corp., thre nation's second biggest bank, said Tuesday it will take a $3 billion debt-related writedown in the fourth quarter in more fallout from the housing and mortgage-lending slump.
Speaking at an investor conference in New York, chief financial officer Joe Price added that the bank, one of the nation's largest, is also setting aside more money for potential losses but considers the losses "manageable."
Bank of America, the nation's second largest bank by assets, is the latest of several financial service companies to lower the value of their lending portfolios in the wake of the subprime lending crisis.
Last week, crosstown rival Wachovia Corp. marked down the value of its loan-backed securities by about $1.1 billion.
Mortgage-related write downs across the banking industry were more than $40 billion in the third quarter, and the fourth quarter could end up being worse. Along with Bank of America and Wachovia, Citigroup Inc. has said it will write down as much as $11 billion and Morgan Stanley anticipates a write-down of up to $6 billion in the fourth quarter.
The latest writedown at Bank of America involves the value of its collateralized debt obligations, which are complex instruments that combine slices of different kind of risk and are often backed in part by subprime mortgages — loans given to customers with poor credit history — as well as other loans.
While Bank of America does not directly offer subprime loans, as those mortgages have increasingly defaulted, the value of the CDOs has plummeted.
Despite the announcement, Bank of America shares rose $1.22, or 2.8 percent, to $45.20 in morning trading Tuesday.
© 2007 Associated Press
moneynews.newsmax.com/money/archives/articles/2007/11/13/114057.cfm?s=al&promo_code=3CD2-1
MoneyNews
Tuesday, Nov. 13, 2007
CHARLOTTE, N.C. -- Bank of America Corp., thre nation's second biggest bank, said Tuesday it will take a $3 billion debt-related writedown in the fourth quarter in more fallout from the housing and mortgage-lending slump.
Speaking at an investor conference in New York, chief financial officer Joe Price added that the bank, one of the nation's largest, is also setting aside more money for potential losses but considers the losses "manageable."
Bank of America, the nation's second largest bank by assets, is the latest of several financial service companies to lower the value of their lending portfolios in the wake of the subprime lending crisis.
Last week, crosstown rival Wachovia Corp. marked down the value of its loan-backed securities by about $1.1 billion.
Mortgage-related write downs across the banking industry were more than $40 billion in the third quarter, and the fourth quarter could end up being worse. Along with Bank of America and Wachovia, Citigroup Inc. has said it will write down as much as $11 billion and Morgan Stanley anticipates a write-down of up to $6 billion in the fourth quarter.
The latest writedown at Bank of America involves the value of its collateralized debt obligations, which are complex instruments that combine slices of different kind of risk and are often backed in part by subprime mortgages — loans given to customers with poor credit history — as well as other loans.
While Bank of America does not directly offer subprime loans, as those mortgages have increasingly defaulted, the value of the CDOs has plummeted.
Despite the announcement, Bank of America shares rose $1.22, or 2.8 percent, to $45.20 in morning trading Tuesday.
© 2007 Associated Press
