Defaults, foreclosures, loan buy backs and billions of dollars of bad loan losses changed the mortgage underwriting process forever.
Mr Huang still grimaces at the thought of a bad loan the bank made in 1994 to a factory located two hours away.
For more minor ailments, bad loan books may be excised and the rest of the bank restored to health with a transfusion of new capital.
Japan's Financial Services Agency said in May the bad loan ratio at the country's 11 biggest banks had fallen from 5.18% a year ago to just 2.93% today.
We were repeatedly advised that liquidity in wholesale markets depended on lending quality: good loan books would continue to attract funding when bad loan books began to default.
The Tax Court has said that's a gift. n If you didn't plan to forgive a loan, but find a relative can't repay you, don't just let the bad loan sit there.
Better credit performance has meant that impairment (bad loan) charges have continued to fall with continued low interest rates enabling the majority of customers to pay their mortgages and even reduce their credit exposures.
"Past experience has taught us that a bad loan crisis usually came three years after a period of abnormal credit surge, " Wei Guoxiong, chief risk management official with the Industrial and Commercial Bank of China was quoted as saying by the Xinhua news agency.
This leads on to the next necessary step: develop the little-used bad-loan agency, the Resolution Collection Bank, and set it to work buying bad loans.
It has reduced its bad-loan mountain to a reasonable size but still desperately needs new sources of profit.
Taiwan may also be understating its bad-loan numbers because it does not consider rescheduled and restructured loans as non-performing.
HVB's bad-loan provisions this year, some think, will be even more than the euro2.5 billion forecast by the bank.
The outsiders did most damage by causing local banks' non-interest income to decline and their bad-loan provisions to rise.
At both banks, the bad-loan problem has only been swept under the carpet.
What Bipop-Carire will not solve, however, is Banca di Roma's bad-loan problem.
Since 1997, when politicians started to realise the scale of the bad-loan problem, only three big banks, and a handful of smaller ones, have gone bust.
This, the bank said, came after having revalued property it holds as collateral confirming a widespread belief that its bad-loan problems may be worse than it has claimed.
Miyauchi told a Japanese daily recently that he thought the economy had bottomed out a year ago and he wasn't expecting such big additional bad-loan provisions this year.
One essential step would be to tighten banks' bad-loan disclosure.
And if bad-loan exposure increases, derivative exposure will escalate, too.
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Unfortunately, China's banks are headed for another bad-loan crisis.
This has forced banks to increase their bad-loan provisions.
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Unless China restructures its inefficient state industry, removes the remaining obligations on state banks to lend on government orders, and liberalises interest rates to provide a measure of competition, then the bad-loan problem could re-emerge.
After all, even after the relief provided by the first batch, the banks' bad-loan ratio still stands at 22%, according to Guonan Ma and Ben Fung in a recent paper for the Bank for International Settlements.
In recent weeks, Tokyo has trotted out a parade of politicians and bureaucrats to make the pitch: the bad-loan mess at the banks is under control, more public-works money is rolling down the pipeline, consumers are perking up.
Mr. Lyle says he's never had a loan go bad because he misjudged the financials.
Fewer defaults and foreclosures mean fewer dips into the MMI fund to make a lender whole when a loan goes bad.
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The good bank will have all the remaining assets, including derivative contracts and its loan to the bad bank.
At least that is the way it works when an ordinary citizen judged to be a bad credit risk seeks a loan.
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