Huge writedowns clobbered bank earnings in the second half of 2007 — and more could be on the way in the first quarter of this year, analysts say.
Last year, big banks and Wall Street firms reduced their profits by more than $100 billion largely because the value of mortgage-related investment holdings had plunged amid the nation's housing crisis.
The latest area of concern has been so-called leveraged loans — financing provided by banks for buyout deals. Some of these deals have been falling apart, making investors wary of buying these loans from banks. Last week, Wachovia filed a lawsuit to try to get out of financing the sale of 56 television stations because the deal price had been lowered.
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