China Banks Show Too-Connected-to-Fail Link to Loans

``Banks have more than their reputations on the line. They have channeled their own capital as well as clients' money through trusts to risky borrowers they're normally prohibited from lending to, such as coal mines and property developers, according to the Trustee Association... Banks had an estimated 6.6 trillion yuan of off-balance-sheet loans channeled mostly through trusts to risky corporate and local-government borrowers, according to Mike Werner, a Hong Kong-based analyst at Sanford C. Bernstein & Co. That figure is equal to more than 80 percent of banks' shareholder capital and has increased 65 percent annually for the past three years, Werner wrote in a Jan. 22 note.''