Wall Street says it is braced for losses. Now what?

MOST BANKERS have been working frantically for the past six months. Traders handled record-high volumes in choppy markets. Their colleagues issued mountains of equity and debt as companies sought to withstand the economic downturn by amassing capital. Commercial bankers offered forbearance to struggling borrowers, and were forced to write down the value of loans as the likelihood of being repaid fell. As a result, investment-banking revenues soared in the first half of the year, and most commercial banks suffered losses as they set aside provisions for bad loans. That made for slender profits at Bank of America, Citigroup and JPMorgan Chase, the big hybrid banks. Goldman Sachs and Morgan Stanley, which are more skewed towards investment banking, posted stellar profits. Wells Fargo, a mostly commercial lender, lost money.