Commercial losses top banks’ 2010 concerns

Miami /
Jan.January 06, 2010 06:19 PM

Commercial real estate losses are the biggest worry for the country’s banks this year, though the damage is expected to be concentrated amongst smaller lenders, according to a review by U.S. bank examiners. “Hundreds of banks will fail or will be resolved over the course of the cycle,” said Eugene Ludwig, former Comptroller of the Currency and Chairman of financial consulting firm Promontory Financial Group. While the financial system is unlikely to collapse under the weight of commercial real estate debt, loan defaults on malls, hotels and multi-family housing will slow the recovery process, analysts said, because the smaller lenders who made the bulk of these loans will be forced to tighten credit in order to absorb losses. Federal Reserve Chairman Ben Bernanke has said tight credit is a “formidable headwind” on the road to recovery. The Fed plans to complete its purchase of $1.43 trillion in mortgage-backed securities and residential mortgage debt by the end of March, though some analysts cautioned against an end to that program, especially if mortgage interest rates rise above 6 percent. [Bloomberg via Businessweek]


Related Articles

arrow_forward_ios
Daily Digest Miami
SoftBank to take control of WeWork, ULI recommends changes to city of Miami zoning code: Daily digest
SoftBank to take control of WeWork, ULI recommends changes to city of Miami zoning code: Daily digest
Daily Digest Miami
Target could be coming to North Beach, Related and Atlantic Pacific head to Miami board: Daily digest
Target could be coming to North Beach, Related and Atlantic Pacific head to Miami board: Daily digest
President Trump, Federal Reserve chairman Jay Powell, and the Federal Reserve (Credit: Getty Images and iStock)
Fed holds interest rates steady amid housing market slowdown
Fed holds interest rates steady amid housing market slowdown
(Credit: Pixabay)
Mortgage interest rates dropped last week and may stay down for months
Mortgage interest rates dropped last week and may stay down for months
Fed Reserve holds rates steady amid weakening housing market
Fed Reserve holds rates steady amid weakening housing market
Fed Reserve holds rates steady amid weakening housing market
(Credit: Pixabay)
Americans’ net worth falls for the first time since the financial crisis amid stock selloff
Americans’ net worth falls for the first time since the financial crisis amid stock selloff
Federal Reserve holds interest rate, stresses “patience” on future hikes
Federal Reserve holds interest rate, stresses “patience” on future hikes
Federal Reserve holds interest rate, stresses “patience” on future hikes
Fed rate may surpass 3% in 2019: Federal Reserve’s Karen Gilmore
Fed rate may surpass 3% in 2019: Federal Reserve’s Karen Gilmore
Fed rate may surpass 3% in 2019: Federal Reserve’s Karen Gilmore
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...