Industry News

BofA, Wachovia, Ambac reveal Q4 write-downs

Banks eke out profits; bond insurer lost $3.26 billion

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Losses on securities and derivatives backed by mortgages and other debt largely cancelled out fourth-quarter profits at Bank of America Corp. and Wachovia Corp, and left bond insurer Ambac Financial Group Inc. $3.26 billion in the red. Bank of America said fourth-quarter profits fell to $268 million, compared with $5.26 billion a year ago. Profits for the year were also down 29 percent, to $14.98 billion. Fourth-quarter results were "severely impacted by ongoing dislocations in capital markets and the slowing economy," Chief Executive Officer Ken Lewis said in a press release, including $5.28 billion in write-downs of collateralized debt obligations (CDOs), complex securities used to finance mortgages and other debts. Provisions for credit losses rose to $3.31 billion, more than double the level of a year ago and up 63 percent from the previous quarter. Bank of America also took an $800 million hit to its bottom line to insulate its money market investors from losses in inv...