The Bank of America lost $68 million before taxes, rescuing its mutual funds from problems with structured notes.

"Think of a structured note as a sports car," one senior trader at a large bank said.

The fund invested in securities known as structured notes that lost value as rates rose.

I think a structured note take a few notes, will that'll be okay, done, put to bed.

A structured note is a hybrid security that includes several financial products, typically a stock or bond plus a derivative.

From the investor's point of view, a structured note might look like this: I agree to a three-year contract with a bank.

Federal regulators also said that at least one community bank had already lost a quarter of its capital on an imprudent investment in structured notes.

So, they bought $260 million of securities known as structured notes, which carried a floating interest rate that changed more slowly than most other rates.

The terms of the structured notes varied widely.

By now, the funds have mostly completed the transition to structured notes, which are similar to swaps.