But some bankers say the changes have not gone far enough to enable them to sell loans made with flexible underwriting standards.

Congress passed legislation last year that enables the department to sell loans to private investors rather than keeping them on its books.

Morgan took a $38.2 million loss during the quarter by selling loans to the third world with a book value of $154 million.

Home Federal did not sell loans in the secondary market, but retained them in its own portfolio.

In some cases, borrowers were sold complicated loans they did not understand and could not afford.

As a matter of policy, he said, the agency does not sell loans that are "clearly in the settlement stage."

The company said fees earned from selling corporate loans to other banks and others fell sharply.

He sold the catalog for a shilling, and restricted loans to one book at a time.

"There is a strong desire among many banks to sell loans before year-end."

Selling loans and other assets reduces the size of a bank but increases its capital.