Big worry for one of America's biggest financial institutions; as yields soar, Bank of America braces for massive bond losses
Are Bank of America's paper losses increasing?
A report by Barron is currently estimating Bank of America’s paper losses on a portfolio of nearly $568 billion of US bonds, which are mostly US agency mortgage securities. This could widen up to almost $111 billion or even more, as compared with the gap of $86 billion at the end of September.
The total unrealized losses as of now could nearly touch up to $500 billion, which would be a massive increase from $364 billion at the end of Q3.
These losses among financial institutions involve nearly all banks insured by the FDIC in the United States, says Barron. The total potential losses would still be a little lesser in comparison to whopping $700 billion at banks at the end of the third quarter of 2022.
As of now, Bank of America’s big losses are in a portfolio that is classified, but is still quite significant.
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