JPMorgan Chase Braces for 'Noisy' Quarter

Whitney says banks will "once again have to raise fresh capital" this year, even with the new capital infusions through the Treasury's Troubled Assets Relief Program, or TARP. She predicts $40 billion in writedowns and provisions for large-cap banks she covers and expects capital needs to be amplified by new ratings downgrades.

Since late 2007, Whitney has forewarned investors that as more risky securities are downgraded by rating agencies, banks will be forced to raise more capital. Since July 2007, more than $5 trillion worth of securities have been downgraded, "but our concern here is that the pace of downgrades has only accelerated through 2008," she writes in the note on Tuesday.

One cause for concern at JPMorgan Chase is its late September acquisition of Washington Mutual. The company has already taken a $1.9 billion -- $1.2 billion after-tax -- loan loss adjustment related to WaMu and is likely to add to reserves for losses in WaMu's credit card portfolio, the bank said during a November investor presentation.

JPMorgan Chase acquired the Seattle thrift for roughly $2 billion, after it was seized by regulators. The fourth quarter will be the first full quarter in which JPMorgan Chase's earnings will include its purchase of WaMu -- and the results are not likely to be pretty.

Merger costs aside, Peters says it's likely that the bank will be forced to take further charges for the WaMu acquisition, despite the large provision it already took in the third quarter for losses on the loan portfolio.