Are MOST Banks Insolvent???
We know that a significant percentage of loans banks make are to commercial real estate deals.
Now we know that commercial real estate prices are crashing around America. 400 of the largest 2000 shopping malls have shut down. The John Hancock building in Boston which sold for over $1.2 Billion a few years ago is now going for about half that amount. In many cases, owners would be lucky of their buildings were worth 50 cents on the dollar. And we know many of these buildings are highly leveraged as bankers were scrambling to lend money against them over the past five years.
Here is a story from Minneapolis:
Twin Cities real estate investor Ned Abdul is the new owner of Northland Corporate Center, a long-vacant Brooklyn Park office property that was taken back by lenders last year.
Abdul declined to comment on the price. Local real estate sources said it was about $1.3 million, far below the 200,400-square-foot building's most recent value for tax purposes of $8.7 million, according to Hennepin County property records.
A COMMERCIAL BUILDING FOR LESS THAN 20% OF TAX VALUE?????
Many banks have well over 100% of their capital out to commercial real estate loans. What do you think the financial condition of these banks are if they were properly accounting for these loans???? Do you think the banks are taking appropriate losses???