Goldman Sachs: Global Credit Losses to Reach $1.2 Trillion

Wall Street is expected to account for nearly 40% of an estimated $1.2 trillion in credit losses stemming from the market crisis, Goldman Sachs reported.

The research arm of the investment bank made the forecast in a note released on March 24.

According to economists at the investment bank’s Global Economic unit, U.S. leveraged institutions, including banks, brokers-dealers, hedge funds and government-sponsored enterprises, will suffer roughly $460 billion in credit losses after loan loss provisions. Goldman estimated $120 billion in write-offs have been reported by these leveraged institutions since the credit crunch began last summer.

Residential mortgage losses will represent about half the damage, with another 15% to 20% coming from commercial mortgages, Goldman Sachs said.

The rest of the losses will come from credit card loans, car loans, commercial and industrial lending and non-financial corporate bonds, Goldman economists said