On the heels of an earnings announcement last week that had many —including HW — singing the bank’s praises for managing its exposure to the structured credit mess, Credit Suisse said Tuesday that “pricing errors” by its traders and continued poor performance in 2008 have led to an additional $2.85 billion in writedowns that will pull down net income for Q1 by $1 billion. Switzerland’s second largest bank said that an internal review found “a small number of traders” that had mismarked certain structured credit positions. While Credit Suisse didn’t disclose exactly what was mismarked, sources have suggested to HW that most of the “pricing errors” involved valuations of so-called synthetic CDOs, which include pooled mezzanine and residual bonds from mortgage-backed security issuances. (Update: The Financial Times corroborates this account in far greater detail). The Associated Press quoted Credit Suisse spokesman Marc Dosch as saying that a “small number” of traders overvalued asset-backed securities. Via Bloomberg, analyst reaction:

“I’m speechless,” said Georg Kanders, an analyst at WestLB in Dusseldorf with a “buy” rating on Credit Suisse. “To announce this just a week after reporting earnings is a major blow. This will again put the whole sector under pressure.”

The news of the writedowns anew at Credit Suisse comes as word broke Tuesday morning that banks have quietly borrowed nearly $50 billion in short-term funds from the U.S. Federal Reserve, an amount the Financial Times described as “massive.” Federal regulators have in recent months opened criminal inquiries into ABS and MBS pricing at several investment banks. Housing Wire noted in late January that the FBI began a criminal probe into fourteen mortgage-related companies, an investigation that in part includes an assessment of pricing strategies at the as-of-yet unidentified firms in question.