Wall Street, reeling over JP Morgan’s bargain-basement purchase of Bear Stearns, is anxiously watching to see “who’s next” to succumb to the continuing credit squeeze, reports the Financial Times. As investment banks prepare to release first quarter results this week—led by Goldman Sachs and Lehman Brothers tomorrow—the mood is grim. “Short-sellers could have a field day with bank stocks this week,” said one banker.
Experts say US banks could write off another $50 billion in loans in the first two quarters, on top of the $100 billion already lost; the financial segment of the S&P 500 Index has lost more than 20% of its value this year. Lehman is likely to report $500 million in new writedowns, the FT says, and even Goldman, which has fared much better than rival banks during the credit crunch, is expected to report a tough quarter, including as much as $3.5 billion in writeoffs.