Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and other lenders reported a large increase in the volume of troubled loans they bought back last year. Barclays Capital estimated that banks repurchased about $20 billion in such loans, with half of the total written off. "Most investors haven't really focused on this issue and are surprised on how much impact this could have, including on earnings," said Ajay Rajadhyaksha, head of U.S. fixed-income and securitized strategy at Barclays Capital.

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