BofA to take $13 billion more in charges: Bernstein

Thu Jul 7, 2011 5:36pm EDT

The sign on a Bank of America ATM machine is pictured in downtown Los Angeles October 8, 2010. REUTERS/Fred Prouser

The sign on a Bank of America ATM machine is pictured in downtown Los Angeles October 8, 2010.

Credit: Reuters/Fred Prouser

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(Reuters) - Bank of America will take another $13 billion in charges related to pending settlement with private label mortgage-backed securities investors, Sanford C Bernstein said.

The brokerage sees the largest U.S. bank by assets posting a loss of 67 cents a share in the second quarter. It had earlier forecast a profit of 29 cents a share.

A group of public pension funds and a group of bondholders have challenged Bank of America Corp's $8.5 billion settlement with holders in soured mortgage-backed securities, which the bank expects will result in $20 billion of charges and a second-quarter loss.

The bank was hit hard by toxic home loans after BofA bought mortgage lender Countrywide Financial in 2008, just as the housing market bubble was bursting, ensuing billions of dollars in losses.

Bernstein also cuts its earnings view on top U.S. investment banks Morgan Stanley and Goldman Sachs, citing the prolonged weakness in U.S. housing, negative impact of European debt and turmoil in the Asian markets.

(Reporting by Rachel Chitra in Bangalore; Editing by Don Sebastian)

(Corrects paragraph 1 and headline to clarify that additional charges will be taken in future quarters, not Q2)

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Comments (1)
ahouse1 wrote:
Outrageous that the investor classes are taking the banks for Billions while the average American homeowner suffering through asset poverty has to pay for it with no hope of a fair or equitable settlement individually. The banks are still making money while they continue to marginalize millions of families throwing them back to subsistence living. I am amazed that the American public would allow this to happen without a fight!

Jul 08, 2011 8:39am EDT  --  Report as abuse
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