They point out the importance of exercising caution in making loans, to avoid repeating some of the risky lending that contributed to the recession.

Banks did not have to increase risky lending on a belief of an unsinkable property market and the magic of dynamic hedging.

Banking crises generally occur after periods of risky lending and resulting loan defaults.

So, are banks supposed to stop doing risky lending and sort their balance sheets out, or not?

It was for this very reason that banks, prior to the 1970s, avoided such risky long-term lending and concentrated on short-term trade financing.

First Federal's participation in risky lending for construction projects or commercial real estate has been small.

The rise of the securitization food chain paved the way for more loosely termed loans as banks engaged in riskier lending.

All the major Australian banks ended up with finance company subsidiaries doing riskier lending than the banks themselves would.

Those figures are the most recent evidence that the industry, which pursued risky lending after being deregulated earlier in this decade, is a long way from recovery.

Fear of prosecution set off a stampede of risky inner-city lending that led, in part, to today's record home foreclosures.