The writedowns exceeded chief financial officer Joe Price's estimate in November that fourth-quarter revaluation of CDOs and MBSs at Bank of America would be about $3 billion.
Losses were more modest at Wachovia, which recorded $1.7 billion in writedowns, but the falling value of mortgage-related securities almost wiped out fourth-quarter returns, with the bank posting just $51 million in clear profit for the last three months of 2007, a 98% decrease from the same period the previous year.
Wachovia, which also revealed $1.1 billion in writedowns back in October 2007, is considered to have so far escaped the subprime crisis unscathed compared with the large Wall Street banks that took large positions in CDOs.
Last week, Merrill Lynch announced an $8.2 billion loss for the fourth quarter following an $11.5 billion writedown of asset-backed securities with subprime exposures. However, if revaluations of assets at non-mortgage-related arms are counted, overall writedowns at the bank were more than $16 billion.
Merrill's losses were announced just a day after JP Morgan revealed $1.3 billion in CDO markdowns and two days after Citigroup admitted a $9.83 billion loss and $18.1 billion writedown for the last three months of 2007.
The week on Risk.net, October 6-12, 2017Receive this by email