On October 8, 2009
Many Banks Unprepared for CRE Bust
Anyone catch this scary stat in that WSJ story yesterday on the Fed’s concerns about commercial real estate? In another sign that many U.S. financial institutions are inadequately protected against potential losses on commercial real-estate loans, banks with heavy exposure to such loans set aside just 38 cents in reserves during the second quarter for every $1 in bad loans, according to an analysis of regulatory filings by The Wall Street Journal. That is a sharp decline from $1.58 in reserves for every $1 in bad loans from the beginning of 2007. In other words, lots of banks aren’t preparing for the coming deluge related to the ailing commercial property sector. The Journal identified more than 800 banks with more…
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