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Too Much Toxic Debt: When will Banks clean up their Mess?

 

New forecasts from the International Monetary Fund suggest that toxic debts on balance sheets of banks and insurers could reach $4 trillion (significantly higher from previous expected figures of around $3 trillion). So far, banks have owned up to only $1.3 trillion in toxic assets. The IMF's new forecast, which could be revised again before the end of the month, will come as a blow to governments that have already pumped billions into the banking system. The banks will probably need more capital going forward (in the form of equity) as expected losses continue to mount. Obviously, this will continue to put downward pressure on share prices of these financial institutions. 
 
Also, we have seen losses from sub-prime mortgages, but what about general business and credit card lending losses that will come going forward? Banks would need to clean up their mess and significantly reduce the toxic assets on their balance sheets before the entire banking system can move forward.