November 4, 2007 (LPAC)-- During the past two months, the release of the world's largest financial institutions' third quarter earnings reports, had a stunningly recurring theme: massive write-downs and/or losses, from sub-prime mortgages, Mortgage-Backed Securities, leveraged loans for leveraged buy-outs that did not materialize, CDOs, etc. EIR has gathered the report of write-downs and loan loss provisions for eleven of the world's largest banks:

Merrill Lynch, $8.4 billion; Citigroup, $6.5 billion; UBS (Union Bank of Switzerland), $4.4 billion; Deutsche Bank, $3.12 billion; Credit Suisse, $2.16 billion; Bank of America, $2 billion; Countrywide, $1.62 billion; Dresdner Bank, $1.09 billion, Morgan Stanley, $940 million; Bear Stearns, $700 million; and JP Morgan Chase, $339 million.

Total write-downs, etc. of the eleven banks: $31.27 billion, of which seven Wall Street banks alone wrote down $20.50 billion; four European banks, wrote down $10.77 billion.

Such uniform write-downs across the spectrum of major banks, which is unprecedented in recent decades, bespeaks major crisis. The Nov. 12 BusinessWeek reported that, altogether, Wall Street banks had taken during the third quarter, "$35 billion in sub-prime related write-downs and lost more than $220 billion in stock value."

However, the situation is worse: the banks report only a fraction of the true losses, and are still carrying many troubled financial instruments like MBS, CDOs, etc. at or near their original value, when these instruments' real value has already fallen 20% to 50%, thus far.

Further, the SEC is reportedly investigating banks that illegally hid losses. The Nov. 2 Wall Street Journal cites the case in which Merrill Lynch sold an unnamed hedge fund "$1 billion in commercial paper issued by a Merrill-related entity containing mortgages." If proven, this would have allowed Merrill to not report the troubled commercial paper onto its book and thereby incur a loss, a potential serious crime.