A majority of credit and risk management executives at the top 50 U.S. banks and credit card issuers say the current credit crisis is a manageable setback, according to new survey.

The ongoing credit crunch, which began last summer as the housing and credit markets began to enter a deep slump, was described as a manageable setback by 55 percent of those surveyed, according to a March 2008 survey by financial researcher TowerGroup, commissioned by business advisory firm Fair Isaac.

The survey also found 33 percent of those surveyed considered the liquidity crisis a systemic threat or a severe challenge to their companies.

Major banks in the U.S. and abroad have been forced to write down billions of dollars worth of assets linked to bad mortgage loans over the past year.

No one doubts the seriousness of the current credit crisis, but it's noteworthy that the largest financial institutions are more likely than others to characterize its impact as severe or worse, said Theodore Iacobuzio, managing director and practice leader at TowerGroup.

The initial damage to financial institutions at the start of the crisis was limited to so called sub-prime loans and the securities derived by bundling them together. When the loans began to fail, investors avoided the derived securities as too risky to touch, leaving banks holding on to billions of dollars in bad debt. The result was a chain reaction which soon spread to securities made from higher quality loans.

As the credit markets have thawed slightly in recent months, some banks have begun to sell those securities to investors at fire sale prices, with some going as low as 10 percent of the original prices.

Looking ahead to the next two years, 50 percent of the executives surveyed said increased credit delinquencies would be their biggest challenge in that period.

The fact that these larger institutions took on more risk in recent years and are feeling more pressure now that delinquencies are rising and defaults are increasing certainly has something to do with that perspective, Iacobuzio said, referring to institutions characterizing the crisis as a systemic threat or severe challenge.

The survey found three quarter of respondents would invest in improving analytics over the next 12 months.

Responses to the survey came from 108 executives from institutions including consumer banks, credit card issuers and other lending companies.