Commonwealth Bank chief executive Ralph Norris and chief financial officer David Craig were forced to defend their approach to handling bad debt charges before an uncharacteristically feisty bunch of analysts at a conference call yesterday for the bank's quarterly update.Norris said the bank would report a big increase in bad debt charges in the December half because of its exposure to a handful of failed corporates, naming three: Lehman Brothers, ABC Learning and Allco Finance Group. The bank did not include Centro Properties Group in that list though the owner and developer of shopping centres may formally join the others in default next month.Commonwealth booked a loan impairment charge of $930 million for the 2007/08 financial year, up from $430 million the previous year.As a percentage of average gross loan and acceptances, the bank's bad debt charge has increased from 0.14 per cent in 2006/07 to 0.26 per cent in 2007/08.Norris said the charge would be more than $1 billion in the December half, representing between 0.4 and 0.5 per cent of loans and acceptances.Analysts accused the bank of having failed to make provision for some of its problem corporate exposure earlier, and of introducing undue volatility into its period-on-period metrics on account of what one analyst called "large, lumpy write-downs".Commonwealth CFO David Craig said the bank had followed the IFRS guidelines."Back in June we could set up an economic overlay in the collective provision but we could not provide in advance for specific accounts. It is an aspect of the IFRS regime we do not like."CBA appears to have taken a more literal interpretation of international accounting standards than its peers. Those standards make it difficult for banks to raise provisions on emerging problem loans, but rather require them to wait for events of outright default to take losses.ANZ and maybe NAB have taken different interpretations that allowed them to maximise their collective provisions and thus reduce, to an extent, the volatility in the income statement.CBA's exposures include loans of $150 million to Lehman Brothers and its subsidiaries, and a $170 million loan to Allco Finance Group.Commonwealth's exposure to ABC Learning includes a $240 million loan and $440 million of hybrid notes.  Twenty-five per cent of the note exposure was written down in the 2007/08 year and another 25 per cent in the September quarter. The notes had a carrying value of $220 million at the end of the quarter. CBA has since written the remainder of the notes down to zero. The bank must also be looking at loss of part of its senior loan to ABC.According to analysis by The Mayne Report, CBA's lending losses to ABC Learning may be the most substantial lending loss yet, in nominal terms, of any bank to any borrower.Norris said there were no systemic problems in the bank's consumer and commercial businesses, although he did forecast that bad debts in both those businesses would increase. Home loan arrears (90 days past due) have jumped from around 0.3 per cent to more