Foreclosure-related problems could cost a quartet of U.S. banks $26 billion, according to a report published by analysts at Goldman Sachs, which noted that Bank of America will feel more than half of those losses.
According to the report, third-quarter earnings were better than expected at the banks, but concerns remain regarding exposure to private label securitizations. "We estimate potential losses of $26 billion spread across several years vs. market cap declines of $28 billion at the four largest banks," the analysts said in the report.
The four banks the report refers to are Bank of America, JPMorgan Chase, Citigroup and Wells Fargo. Goldman analysts said in a note to investors that Bank of America alone could see total private-label losses of $15.5 billion. (B of A inherited most of it PLS problems from Countrywide Financial Corp., which it bought in August 2008.)
JPMorgan's private-label losses are expected to cost it $6.8 billion, while Citigroup's losses could total $4.1 billion. Wells Fargo, meanwhile, could see losses of $1.1 billion.
