As banks disclose more multibillion dollar write-downs spurred by the collapse of the subprime mortgage market, investors increasingly want to know what the banks knew, and when they knew it.

While some say no one could have predicted how quickly the credit markets would seize up, others say big banks are in the business of risk management and managers could have done a much better job balancing risks.

When we are talking about numbers of this magnitude, there really is no excuse for people to suddenly discover that they are confronting potential risks many billions of dollars higher than what they anticipated, said Harvey Pitt, former chairman of the U.S. Securities and Exchange Commission, now chief executive of consulting firm Kalorama Partners.

The problem really relates to the internal capacity at any of these banks to identify with some degree of accuracy what their true risk profile is.

As banks struggled to assess the risk of tens of thousands of loans carved up and pooled into various securitized products, input from auditors and changing market conditions could have boosted the amount of time necessary to sort through the paperwork.

I really believe they are trying to be thorough, said Ned Riley, chief executive of Riley Asset Management and former chief investment strategist at State Street Global Advisors.

Even in the age of technology and automation this is still a process that requires human input, experience and obviously it has to pass the scrutiny.

And the banks, which adopted mark-to-market accounting rules earlier than required, have been providing more transparency than ever before in the most opaque areas of their business.

In the fourth quarter, you will get as much as you possibly can from any of these institutions, Riley said. They realize the seriousness of the situation and they don't like to see their stocks falling this dramatically.

But others say, even if the markets have been particularly hard to navigate for bank executives, the way they have disclosed the details and dribs and drabs, carries great risk to their reputations.

For executives, this is very, very challenging and because these transitions are so jarring, they tend to opt for less information which can fly in the face of perceived integrity, said Matt Paese, vice president at executive talent management company Development Dimensions International.

The banks could also face legal liabilities for not disclosing these issues fast enough.

Under U.S. Securities and Exchange Commission rules, banks are supposed to notify shareholders of a material event within four days of learning about it.

(The banks) didn't know until four days ago they had a big problem? said Mary Beth Kissane, head of investor relations at corporate public relations firm Walek & Associates, and a member of PR Newswire's Disclosure Advisory Board. Either they don't know, which is a competence issue, or they do, which is a criminal issue.

At least nine shareholder suits have been filed against Citigroup Inc (C.N: Quote, Profile, Research) and Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research) executives in the last month, after the firms announced big write downs.

Citigroup's credibility with investors is in shambles, shareholder Jeffrey Harris, claimed in one such suit filed last week in U.S. District Court in Manhattan.

Several suits claim that it became apparent to the market and the banks as early as mid-July that they would be adversely affected by the mortgage crisis, and say the banks did not properly adjust their loan loss reserves.

Both Citigroup and Merrill, which have seen their chief executives depart since large writedowns were announced, have said the suits are without merit.

(Reporting by Emily Chasan, editing by Leslie Gevirtz)

Investment Citigroup Merrill Lynch