Banks Get Real About Real Estate Losses

In June, 1991, First Chicago Corp.'s top officers devoted their annual management retreat in Kohler, Wis., to the bank's troubled real estate loans. They considered the alternatives. Maybe it was best to bite the bullet: simply write off the loans and dump them. Or create a separate "bad bank" to handle the dirty work. Or perhaps hold on and ride out the real estate recession. Says W.G. Jurgensen, the chief financial officer: "We all recognized that real estate assets were the single most negative influence on our earnings."

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