Merrill Lynch doesn’t report third quarter earnings for another couple weeks, but with many peers already having taken it on the chin, analysts expect significant pain for Merrill too.

On Wednesday Goldman Sachs analyst William Tanona marked down Merrill’s earnings estimates for the third quarter to $1.80 a share from $1.95, and lowered the stock’s price target to $94 from $108. Contributing to Tanona’s estimate is a prediction that Merrill will have $4 billion in write-downs, primarily from the fixed income division, resulting in a net loss of $1.5 billion for the quarter.

Others were even more harsh in their predictions: Fox Pitt Kelton analyst David Trone lowered his earnings per share estimate for Merrill to $1.20 in a research report today, from a previous estimate of $1.91, “while noting that forecasting confidence is low in periods such as these.” Trone also expected the firm to experience $3.5 billion “in gross negative marks and realized losses” on leveraged loans, CDOs, and mortgages resulting in $2.2 billion in net losses. Trone attributes the more positive net loss estimate to “$700 million in hedging gains; $500 million in loan fees; and $100 million in gains on liability marks.”

Goldman Sachs, which beat every analyst’s earnings per share predictions by more than $1.50, raked in $6.13 earnings per share in the third quarter, largely due to astute credit hedging; Morgan Stanley, which reported last week, suffered a 17 percent drop in profit compared to the third quarter last year, with EPS of $1.44, $0.10 below analysts’ estimates, partially attributable to $1 billion in losses due to loan write downs; Bear Stearns also reported last week and experienced a 61 percent drop in profits compared to the third quarter last year, largely related to multi-million dollar losses in mortgage focused hedge funds; Lastly, Lehman Brothers reported better than expected earnings of $1.54 per share despite $700 million in losses related to the credit crunch.

In separate but related news, Congress is grilling the credit rating agencies as well as the SEC this week on Capital Hill about how and why the current credit crisis has occurred. SEC Chairman Cox testified yesterday that the SEC is examining whether agencies like Moodys Investors Service and Standard & Poors were “unduly influenced” by issuers and underwriters that paid for the credit ratings (read his full testimony here). Separately, Teamsters Local 282 Pension Fund announced on Wednesday it is suing Moody’s Corp., the credit rating agency, for allegedly assigning “excessively high ratings” to bonds backed by subprime mortgages.