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BofA Braces for Big Hit

A bank officer says it could take a writedown of some $3 billion on its CDO positions.

Bank of America

(BAC) - Get Bank of America Corporation Report

expects to feel more pain due to losses tied to subprime debt.

The second-largest U.S. bank's chief finance officer, Joe Price, said Tuesday that BofA could face $3 billion in writedowns because of its investments in once-highly-rated collateralized debt obligations, which have seen their values plummet.

Speaking during an investor conference sponsored by

Merrill Lynch


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, Price said that the loss would be recorded the fourth quarter and could potentially become a bigger hit if CDO prices continue their precipitous drop.

As a result, the bank is setting aside capital for further losses. BofA's loan and high-yield finance commitments as of Sept. 30 totaled $28 billion, according to media reports.

CDO paper has been the bane of Wall Street firms. Writedowns in CDO debt have significantly hobbled financial institutions including Merrill, which saw $7.9 billion in mortgage security-related losses, and


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, which has said it expects to see writedowns of as much as $11 billion.

Those losses haven't sat well with investors and also have resulted in big shakeups in the executive suite. Citi's Chuck Prince lost his job, and Stanley O'Neal lost his CEO seat at Merrill.

Shares of BofA were recently up 3.1% at $45.36.