WOOF! The Financial Times is reporting that Bank of America and JPMorgan Chase are thought to be on the verge of announcing combined losses of $3 billion from mortgage-backed securities and leveraged loans when they report third-quarter earnings this month. The announcements would bring total losses at the world's leading banks from subprime-related assets to $20 billion, said the newspaper.
JPMorgan Chase's losses will come on leveraged loans of $1.4 billion, Sanford Bernstein analyst Howard Mason said in the report. He also anticipates it will suffer an additional $700 million in writedowns on mortgages and mortgage-backed securities, said Financial Times. Bank of America is expected to see around $700 million in leveraged loan losses and mortgage writedowns of $300 million. The newspaper added that the two entities lend significantly to private equity firms, so most of their writedowns will come from leveraged loan commitments they'd have to take a loss on if they sold now.
Yikes. More of the "things getting worse before they get better" phase we are now in. Hold on, it's going to continue to be a bumpy ride!