BAC $ 3 billion CDO write-down

Bank of America to write down $3B in debt

Excerpts:

Bank of America Corp., the nation's second biggest bank, said Tuesday it will take a $3 billion debt-related writedown in the fourth quarter and warned its losses could grow as the market wrestles with the 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 is also setting aside more money for potential losses but considers the losses "manageable."

Bank of America is the latest of several financial service companies to lower the value of its lending portfolio 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 writedowns 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 writedown of up to $6 billion in the fourth quarter.

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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.

Comment: More Subprime bite! So far: C, BAC, JPM, WB!