Banks Could Lose $97 Billion From Mortgage Mess

10/28/2010 05:24 pm ET | Updated May 25, 2011

As investors try to get refunds for shoddily documented mortgage securities, banks could lose nearly $100 billion, according to one company's estimate.

Speaking Wednesday at a Manhattan conference, Laurie Goodman, an analyst and economist with Amherst Securities Group, said the cost to banks as investors attempt to "put back," or sell back, their mortgage securities could total $97 billion. That number depends on several important factors, such as the investors' aligning themselves behind a common cause, and Goodman called the estimate "theoretical." Still, Goodman noted that "the things that scale it [$97 billion] down are very, very hard to determine."

"That's the headline number that people were discussing in that room," said CNBC's Kate Kelly.

The estimate comes as mounting doubts about the legitimacy of mortgage documentation have spurred some investors to ask for their money back. Last week, Bloomberg reported that the large investment firms Pimco and BlackRock have teamed with the New York Fed to ask Bank of America to buy back allegedly misrepresented securities.

Kelly, speaking on CNBC's "Strategy Session" Wednesday, gave some clues about the answer to another big question: Who exactly stands to recoup that $97 billion?

While Kelly acknowledged that the attendance of investment companies at the conference doesn't confirm that they've invested in the securities in question, it at least signals their interest in the putback issue. The names are big: the hedge funds Paulson & Company and Caxton Associates; the investment firm Fortress Investment Group; the private equity firm Och-Ziff; the insurance company MetLife. Kelly noted that Paulson has a sizable stake in Bank of America.

As CNBC's David Faber said, those investors represent "a lot of buying power."

WATCH Kelly discuss the conference on CNBC: