Bank of America Corp. reported today a loss of $7.6 billion in the third quarter, as it took a writedown of more than $10 billion to prepare for new legislation that it says could virtually wipe out its debit card revenue.
Excluding that writeoff, the bank made $2.8 billion for common shareholders, handily beating analysts' expectations as troubled loans fell and credit quality improved. In the same quarter a year ago, the bank lost $2.2 billion for common shareholders, as it struggled with consumer defaults.
The debit-card writedown is a $10.4 billion "goodwill impairment charge" that Charlotte-based Bank of America is taking to prepare for the impact of the so-called Durbin Amendment. That rule, part of the sweeping Dodd-Frank financial reform bill, severely limits the fees that banks collect from merchants whenever a customer uses a debit card.
Bank of America currently makes about $2.9 billion annually in debit-card revenue, and says it expects to have to shed up to 80 percent, or about $2.3 billion.
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