Charles Prince, the chairman and chief executive of the world's biggest bank, Citigroup, has resigned - the second head of a leading US bank to step down within a week.
Citigroup has been hit by exposure to sub-prime lending
Q. Why has Charles Prince left Citigroup?
Calls from investors for Mr Prince to leave had been increasing since the bank reported a 57% drop in quarterly profits, after losses in the sub-prime mortgage market.
It seemed that confidence in him was swiftly draining away.
And when the head of rival Merrill Lynch, Stan O'Neal, resigned after reporting heavy losses, many felt that Mr Prince's own position was untenable and that he too should "do the honourable thing".
After Mr Prince stepped down, Citigroup revealed that it was facing losses of between $8bn and $11bn (£3.8bn and £5.2bn) in previously undisclosed losses due to a decrease in the value of its $55bn portfolio of sub-prime loans.
And it warned that there could be further losses to come in its trading positions in sub-prime mortgages if its hedging operations did not succeed.
It is worth pointing out that some analysts say that the sub-prime losses were simply the straw which broke the camel's back - and that the whole structure of the group was too unwieldy for its profits to meet its potential.
Why has Citigroup been hit by the credit crisis?
It has been one of the most active participants in the sub-prime mortgage-backed securities market, buying billions of dollars worth of mortgages and then selling them on to international investors.
And since August the credit market for these types of securities has frozen up, leaving many big banks holding unsold mortgage securities whose value has taken a tumble.
The lack of buyers has made it difficult for companies to evaluate the size of their potential losses.
In its statement, Citi said that its securitized mortgage-backed debt obligations "were not subject to valuation based on observable market transactions."
Instead, it has had to estimate the fair value of those securities, based on assumptions about future house prices and cash flows from the underlying mortgages.
This makes their actual value highly unreliable.
Overall, there are over $1 trillion worth of sub-prime mortgage-backed securities outstanding, and the Federal Reserve has estimated that the financial sector as a whole could lose at least $100bn.
Who else might be vulnerable?
Perhaps the most destabilising factor in the whole credit crunch has been the uncertainty over who has been exposed to losses, and exactly how heavy those losses are.
In some cases they have been far greater than institutions themselves realised. Citigroup is jus the latest bank to reveal further projected losses. Merrill Lynch already dramatically revised the size of its write-downs
Analysts now expect other banks to follow suit.
What do woes at Citigroup mean for me?
For banks this evidence suggests that the credit crisis is not going to simply go away.
It means that both individuals and business may find it increasingly difficult to secure credit as lenders are more cautious over who they will lend money to.
This trend has been seen most sharply in the US, where for many people getting a mortgage is proving close to impossible, as lenders tighten their criteria following a surge in defaults on mortgage payments.
One result has been that shares have been volatile as the extent of the credit crisis has emerged, especially those in financial institutions.
As well as impacting on shareholders, the health of personal and occupational pension schemes could also see a knock-on effect of stock market jitters.
Bonuses of City workers are set to fall and a slowing of the global economy could see thousands of UK jobs cut, observers say.