| Total losses and write-downs at big banks struggling to contain the debt-market crisis have topped $41 billion, as Wachovia Corp. disclosed that the value of certain risky securities declined by $1.1 billion in October. Wachovia, the fifth-largest U.S. bank by stock-market value, attributed much of its latest write-down to a deterioration in the market for the "super-senior" class of collateralized debt obligations. CDOs are created by pooling securities often backed by mortgages, slicing them into pieces and selling the pieces to investors. Until recently, the super-senior pieces were thought to be shielded from the volatility that shook riskier CDOs Meanwhile, Bank of America Corp. warned in a securities filing it will "continue to be adversely impacted" by the anxious market, adding that it "may take more time for the markets to return to a more normal environment." Contrary to some expectations, the largest U.S. bank didn't announce write-downs on any mortgage-related securities. Months into the debt-markets crisis, banks are still scrambling to assess and control their exposure to risky mortgages. Following repeated assurances from some banks that the situation wasn't likely to get worse, analysts and investors are now feeling burned. "This is literally a virus," said Anthony Sanders, a finance professor at Arizona State University. "The rocket scientists [at financial institutions] managed to create a missile that landed on themselves." Shares of Barclays PLC fell by as much as 9% in midday trading amid rumors the London bank faced write-downs as high as $10 billion, a management shake-up and the need to raise emergency capital. Barclays spokesman Alistair Smith said there was no substance to the speculation. Barclays is set to deliver an update on Nov. 27 about its performance in the three months ended Sept. 30. The bank previously said profits at three major divisions were running well ahead of the last period during the first nine months of 2007 and that it expected to remain profitable for the rest of the year. Shares in Royal Bank of Scotland Group PLC fell by as much as 6.6% before rebounding. A spokeswoman declined to comment on the drop. Analysts in Citigroup Inc.'s fixed-income quantitative research team have predicted that banks could face $64 billion in write-downs connected to subprime mortgages, or those issued to borrowers with poor credit histories. The bulk of the losses would come from exposure to the safest portions of CDOs, the analysts said in a report. They predicted that Barclays would face a write-down of $2.86 billion tied to super-senior CDO exposure. "With the U.S. investment banks reporting significant losses in recent weeks, it is unlikely that Barclays and RBS have got off scot-free," analysts at London-based investment firm Charles Stanley said in a research note Friday. Wachovia had already reported pretax losses of $1.3 billion related to the market's turmoil during the quarter ended Sept. 30. But subsequent downgrades by ratings agencies are pressuring banks to take deeper write-downs. There are some aspects of what are going on that we fully expected in terms of correction," Amy Brinkley, Bank of America's chief risk officer, said in an interview. "But I don't know that anybody expected the degree to which liquidity would lock up." J.P. Morgan Chase said further deterioration in market conditions could lead to additional markdowns of leveraged loans used to fund corporate buyouts and unfunded commitments, contractual obligations for future funding. The company disclosed it had $40.6 billion in leveraged loans and unfunded commitments as of Sept. 30. E-Trade Financial Corp. also warned that additional write-downs of its CDO and second-lien holdings are likely to occur in the current quarter, causing the New York discount broker to miss earnings targets issued just three weeks ago. Separately, credit-card issuer Capital One Financial Corp. reported that its rate of bad loans reached 3.28% last month, up from an average of 2.86% for the third quarter. The increase is the latest sign that subprime problems are spreading to credit cards and other types of consumer loans. --Margot Patrick contributed to this article. | 
