The International Monetary Fund (IMF) recently released a report saying that losses from the credit crisis might reach $4.1 trillion by the end of 2010. Losses stemming from U.S. real estate will reach $2.7 trillion, up from the previously forecast $2.2 trillion in January.

“From these huge sums, the IMF estimates that banks will support much of the losses, around $2.5 trillion,” Trade Team notes. “Pension and hedge funds will probably be forced to write-down the rest of the sum”. 

“Since the beginning of the credit crisis, the IMF has constantly increased the estimated losses from the financial sector. If the situation in the financial markets continues to deteriorate, mostly due to the situation in the credit markets, the estimated losses will again revised higher in the next Global Financial Stability Report,” Trade Team said. “It’s also worth nothing that the IMF said the crisis had reached both households and corporations, something new from the previous report”

In the mean time, markets are starting to wonder how much of the recently reported bank earnings have been influenced by the new accounting rules, which allowed banks to value illiquid assets at their own valuation. For example, Goldman Sachs managed to shed December from the earnings report, avoiding a $1.3 pre-tax loss, while Bank of America’s earnings report was lifted by $2.2 billion by Merrill Lynch. Some estimate that almost half of the reported earnings were influenced by one-time events, such as new accounting rules. No wonder the bank’s default swaps had a small rally over the last few days, taking into account the real situation of the sector.