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Commercial RE Weakness = Lots o' Bank Failures

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January 08, 2009 – Comments (1)

Great post at Calculated Risk.

Short story: while big banks gorged on crappy residential real estate over the past decade or so, smaller banks gorged on "safe" commercial real estate loans. Delinquency rate on these is skyrocketing, so we'll likely see these small fry failing in big numbers over the next year.

Now we know why some of the small banks out there with their "safe" commercial RE portfolios took the TARP money, I suspect.

1 Comments – Post Your Own

#1) On January 08, 2009 at 10:12 AM, MrSucrose (< 20) wrote:

My dad is in commercial lending and he has said that this is a real problem, lots of deals going south.  The funny thing is that the smaller banks risk profile has helped them a lot on the residential side.  Their non-performing residential loans aren't shooting to the moon yet keeping them in decent shape. 

 This is just word of mouth analysis.  Don't read into it too much.

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