JPMorgan Chase, Wells Fargo, Citigroup and Bank of America all had to write down the value of energy loans or set aside more money to cover losses.
Julia Black, a professor at the London School of Economics, said, "Supervision isn't a transparent process, but I'm surprised it hasn't already been required to hive off the bad loans or to set aside more capital".
To reserve against the possibility that the company will simply have to forgive a chunk of these loans, Cypress has set aside a meager $16 million.
Lower write-downs and delinquencies allowed the company to slash its provision for loan losses, or money set aside to cover loans that it does not expect to collect, by 68 percent, to $373 million, from $1.18 billion a year ago.
When Congress created the DOE loan program, it set aside $10 billion dollars to cover expected losses.
Pay off the loan first, then set aside at least a little bit of money to make sure you never need to take out a loan again.
The RBI says that, from the beginning of April, loans that have had their terms rejigged will be treated as if they are bad loans: banks will have to set aside 15% of the loans' value as a precaution.
This week he demanded that banks write off their bad loans rather than just set aside provisions to cover potential losses.
The embattled US financial services group Bank of America (BoA), which is facing a revolt by shareholders, delivered a gloomy assessment of economic conditions as a surge in bad loans forced it to set aside $13.4bn£9.2bnbn) to cover credit losses.
That means that in contrast to the treatment of mortgages or corporate loans, banks need not set aside more capital if they buy additional government bonds, even though these assets in reality may be among the riskiest that the banks own.
While HSBC may have found a way to bolster investor confidence in its SIVs, some bank executives are still concerned about additional write-downs, especially after HSBC said earlier this month that losses in the housing market were spreading to credit card and other consumer loans, forcing it to set aside $3.4 billion, more than it had forecast four months earlier.
