E*Trade Woes Renew Buyout Chatter

The online broker on late Friday disclosed it plans to take further writedowns on its $3 billion securities portfolio. It also said that Dennis Webb, E*Trade's president of its capital markets unit, was leaving the company.

E*Trade is also facing a Securities and Exchange Commission investigation into its loan and securities portfolios, according to its quarterly filing on Friday.

E*Trade has seen declines in the fair value of asset-backed collateralized debt obligations, or CDOs, and second-lien, or home equity-backed, securities as a result of recent rating agency downgrades of asset-backed securities, it said. The securities portfolio held approximately $450 million in asset-backed CDOs and second-lien securities as of the end of the third quarter.

The company, which provides online banking, brokerage and lending to retail and institutional customers, joined the likes of Countrywide Financial(CFC Quote), Washington Mutual(WM Quote) and other smaller lenders hit hard by the housing downturn and mortgage deterioration, particularly as the secondary market for mortgages ground to a halt. The stock is down more than 80% this year.

E*Trade said in September that it was restructuring the business to eliminate its wholesale mortgage operations and streamlining its direct mortgage lending business to focus on the retail franchise, among other things.

It also said at the time that it was shifting its balance sheet to focus on retail assets and liabilities.