Aames Financial Corp. said Tuesday that loan writedowns spawned a $195.7 million loss for the quarter ended Dec. 31.

The subprime lender also said it expects a loss for the quarter ending March 31.

"Extraordinarily negative market conditions" forced the company to write down the value of loans on its books by $192 million, chief executive Cary Thompson said. The company could not securitize the loans, he said, because demand for asset-backed securities was weak and is likely to remain so.

The company also said it has replaced its auditor, PricewaterhouseCoopers, with Ernst & Young, and will adopt the "cash out" method of accounting, which prohibits it from forecasting profits.

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