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It helped the banks build loan volume.
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"In the end," he says, "the fact that they got the money but took steps to fix themselves, to raise private equity, build loan-loss reserves to pay the government back quickly, will be viewed as a successful way to deal with a very difficult situation".
The expectation of loan default in the future is associated with an expansion in lending, which may enhance the loan loss provision and build up loan loss reserves.
"Now, we are looking to the industry to take the next step, and begin to build their loan portfolios".
Dan Gilbert On Dissing LeBron: 'Yeah, That Was Stupid" Gilbert's shoot-first style may have helped build a loan empire, but it backfired spectacularly when LeBron James dumped Gilbert's Cleveland Cavaliers for Miami in 2010.
Many smaller breweries build on loans and advice from larger peers.
In the U.S., it is common business practice for the initial lender to provide an interim loan (the "construction loan") to build a building.
He built a loan portfolio so flawed as to suffer £32.5bn of impairments in 2007-10 alone.
As a result, by 1992 the banking system had built up loan losses that all but wiped out its capital.
"Prudent lenders" will now want to step up their monitoring efforts, he said, and the added cost will ultimately be built into loan pricing.
"No one had built a loan platform for this product," Khan told me.
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