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TESS VIGELAND: It's a big week for earnings reports out of the banking sector, and no one is expecting it to be pretty. Two big ones, M&T Bank Corp and Sovereign Bank, warned today that the subprime mess and credit crunch will hurt their results. Citigroup reports tomorrow, and CNBC reported this morning, that the country's largest bank will announce a $24 billion write-down and up to 24,000 layoffs. That write-off is more than twice what Citigroup previously announced.

Ashley Milne-Tyte asks how the company truly couldn't have known just how bad things would be.

ASHLEY MILNE-TYTE: As to whether Citigroup is reeling with shock at the extent of its subprime losses, that depends who you ask. Bart Narter is with consulting firm Celent.

BART NARTER: I think they did not expect things to get as bad as they have turned out to be.

Narter says Citi isn't the only bank to be surprised. Bank of America ploughed $2 billion into Countrywide Financial in August. It expected Countrywide to improve, but last week it had to buy the lender to save it from bankruptcy.

NARTER: If Bank of America, who's the number six mortgage originator in the country, can make that kind of a mistake, it's not difficult for me to imagine that Citi could make that kind of a mistake as well.

Not everyone believes the banks are that naive. Christopher Whalen is managing director of Institutional Risk Analytics. He says the banks bought mortgage-related securities knowing they might not be able to trade them as easily as a share or a bond.

CHRISTOPHER WHALEN: So the market value was always relative, much like any illiquid security, but on the other hand they have devoted so much time and money and manpower to growing this market that I don't think they could admit that the whole thing was imploding. Because that's what's happening.

Whalen says investors will want Citi to be completely upfront about its losses tomorrow. Bert Ely is a banking consultant. He says Citi might end up overstating the damage.

BERT ELY: My sense is that the banking firms and their accountants are going to want to err on the conservative side. Far better to overestimate the losses than underestimate them.

Ely says it'll be at least another year before banks and investors find out precisely how much havoc subprime has wrought.

In New York, I'm Ashley Milne-Tyte for Marketplace.