It has been the same story for years. When banks release their earnings reports in May, bank officials say they have written off their bad loans "pre-emptively." Since they have written off huge portions of their problem loans, their future costs for bad-loan disposal will be marginal, they say.
But as the year progresses, the banks revise upward their estimates for additional writeoffs. Some cite a continuing decline in the price of real estate secured as collateral.
Others say they were forced to put up more loss reserves because their borrowers suddenly went belly-up or asked for debt forgiveness from banks in a last-minute attempt to avoid bankruptcy.