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Mortgage lending cuts into Wall Street banks’ profits

Originations down, foreclosures up in Q2

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Wall Street investment banks Goldman Sachs, Bear Stearns and Lehman Brothers reported a drop in revenue from mortgage underwriting, although second-quarter profits were still up at two of the three firms. Bear Stearns Companies Inc. said profits were down 10 percent, despite record setting second-quarter revenues of $2.51 billion. Excluding a one-time accounting charge, net income would have been $486 million, down from $539 million for the second quarter of 2006. Earnings per share would have been $3.40 for the quarter. Fixed-income net revenues were $962 million for the 2007 second quarter, down 21 percent from the record $1.2 billion posted in the second quarter of 2006. Mortgage-related revenues reflected both industry-wide declines in residential mortgage origination and securitization volumes and "challenging market conditions" in the subprime and Alt-A mortgage sectors, the company said. Goldman Sachs Group Inc. blamed weak results in mortgages, particularly in the ...