US Banks Could Lose $10 Billion More in Fourth Quarter

Deutsche analyst Mike Mayo estimates that the Large US banks and brokerages could suffer an additional $10 billion more in the fourth quarter as deteriorating conditions due to the credit market continue to undercut the value of subprime mortgages.

Most of this loss will come from large banks like Citigroup and Merrill Lynch. Mayo estimates that each of those two banks will report about 4 billion dollars in mortgage write-downs this quarter. This coming largely from subprime California, Nevada, and Florida mortgages.

Last week Merrill Lynch reported that it wrote-down 8.4 billion dollars in mortgages third quarter of this year bringing their stock to it’s lowest level since 2005. While Citigroup reported 6.5 billion dollars in write downs bringing their stock to 4 and a half year lows. Citigroup’s CEO Charles Prince is also expected to resign this weekend, as the widening sub-prime mortgage crisis deals a final blow to a reign long under attack. This comes after Citigroup already changed up management in other divisions.
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