Regional Banks Could Suffer From Commercial Real Estate Bust

Jul. 24, 2009:

NEW YORK (Fortune) -- Regional banks can no longer ignore the elephant in the room -- their exposure to the commercial real estate bust.

Though housing markets remain weak, analysts expect credit problems over the next year to center on commercial real estate -- mortgages on office and apartment buildings and shopping malls, as well as construction, development and industrial loans.

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Read the whole story: Jul. 24, 2009

Comments

[RichardD]

03:31 PM on 07/28/2009

This issue will provide the second wave (of three, at least) of this on-going financial mess America is in as we speak.
The third will come with the inevitable 'trade-rationalization' that the World markets will impose on the cochamamie financial mess the Bush Administration left America with.
Each wave will lead to concomitant job losses and business failures.
Five more years of living on the edge...at least

[bluecollarblogger]

01:31 AM on 07/28/2009

Who cares if these guys are losing money! do you think it really breaks the millions of us hearts that someone like Suntrust, Citi, Wells fargo....is losing money? My heart aches! These guys are so greedy, so corrupt, so that in their minds they are doing us all a favor. I say let the big dawgs fight! When they have torn each other all apart, shut each other down, then we will all benefit! In the new world we'll all make money off rice wine an kung po chicken........cause thats who is going to be running things.............

[grateful4thedead]

08:22 PM on 07/27/2009

keep your eye out for the next bailout....the Fed has a program to start buying commercial real estate from banks.....guess who will end up paying for it????

[Lahonda]

08:11 PM on 07/27/2009

You mean the same bust experienced in this regard when the Dot.com bubble burst?

They are sitting on the asset, or not... depending on their due diligence.

[jojony]

05:46 PM on 07/27/2009

The fed is going to step in and buy these distressed mortgages just like they did with residential. The banks balance sheets will be cleaned up while the fed (taxpayer) continues to accumulate worthless mortgages on our balance sheet.

BUSH/PAULSON & OBAMA/GEITNER ARE reading from the same play book. There is ZERO difference here.

A huge and continued transfer of wealth from the have-nots to the haves. America, isnt it great!!

[VivaZapata]

05:41 PM on 07/27/2009

i've got a goldman sachs they could get bought out by

[aintnogod]

05:08 PM on 07/27/2009

Funny thing. Dumb as I am, a retired machinist who's literate, I read nearly a decade ago that American retail space was overbuilt by millions of square feet, yet corporate leadership and financial wizards did not seem to have come across the same information as I came across, so they added to the overbuilding and now the chickens come home to roost. Could it be that greed, the desire to close one more deal, to make one more closing fee, one more real estate killing, caused greedy capitalists to keep on borrowing, lending and building, the hell with the American economy???? How did these greedy dummies rise to the top?

[KillTheMessenger]

05:36 PM on 07/27/2009

Right on... what is completely inexplicable, though, is where the money came from. That any bank would give a real estate developer with two empty buildings and nothing to show for even more money to build a third one is just absolutely mind boggling.

[petef59]

10:29 PM on 07/27/2009

Their "reading" is probably all the same business rags and university press journals dedicated to business. Kind of a little incestuous "entrepeneur, teamwork-buliding" book club. They generally sneered with arrogant contempt at liberal arts types and working (especially union) people during their big ego days. Just like mainstream politics of the same time.

[nohobear]

04:46 PM on 07/27/2009

This has been predicted for some time. This may be the body blow that brings us into Great Depression #2. I suppose another multi trillion dollar bailout for the banks is being formulated right now in the halls of Congress, while what's left of middle class America circles the drain. And yet strangely, we can't afford health care for all Americans at a tenth of the cost of what we've given to Wall Street and the Banks already.

Now would be a good time to stock up on canned foods.

I have a sinking feeling that smaller regional banks will fold and be absorbed by the big national ones that have received the trillions in bailout money. Let's face it, right before our eyes we are becoming economic serfs to the corporations and banks. Welcome to 21st century feudalism. All hail Chase. All hail Morgan Stanley. Pity that America thing didn't work out. Such a good idea.

USA 1776-2001 (ascension of King George) though personally I would mark the Presidency of Ronnie Raygun as the fall of the Republic.

[Tyler-Durden]

05:06 PM on 07/27/2009

it is possible, but then again, there are always more banks. if people started moving their money out of the major chains and into local credit unions, it would help significantly.

[nohobear]

05:17 PM on 07/27/2009

I agree, I gave the finger to Chase 6 months ago and moved my banking to a credit union. They are the best way to go. But I think the problems are systemic because of de-regulation, lobbyists, and general corruption. And even if the political will were there (which it isn't), we still couldn't turn the ship fast enough at this point to avoid the iceberg straight ahead.

The corruption of our government is too deep. Perhaps a full blown economic meltdown will be the reset button that takes back our country from the corporatists.

[petef59]

10:38 PM on 07/27/2009

$27 trillion in wealth to be passed on to the upcoming generation of trust fund recipients. Most middle-income wage earner are taxed at about 30% plus local property taxes. Think the trust fund babies can survive on $18 trillion and pay their fair share? This from a CNBC in-depth report earlier this year.

[larry278]

04:02 PM on 07/27/2009

This depression must be a milipede, no a flock of milipedes, another shoe drops every day. The shoes have been dropping since 9/15/08. Since the shoes are made in Asia, this shoe dropping is starting to cost real money. The shoes are Nike, not cheap Converse sneakers or gym shoes. Remember the 19 cents a pair flip-flops? Where can you buy really cheap shoes in 2009?

[Sundialsvc4]

02:21 PM on 07/27/2009

Obviously, all of the real-estate speculators must be bailed out at Public expense.

Go ahead, borrow more. "Borrow' (sic...) more.

[TJCole]

01:51 PM on 07/27/2009

Commercial Real Estate and Credit Card debts will be the next Tsunami's to hit our economy...

We needed to Nationalize our major banks and AIG and change the entire corrupted banking culture..!

[Adartist777]

03:57 PM on 07/27/2009

You've got that right. This ain't over yet.

But, on the positive side, since so many people are being displaced from their homes, use some of these empty properties to house the newly created homeless. Use some of the office buildings to incubate new start up businesses with low rents. Better to have people occupying the needed space than to let the buildings rot empty.

The credit card Tsunami is starting to hit now at the same time as the commercial real estate market. The government gives unlimited money out to private business, but refuses to do the same for its citizens. We need another stimulus package for Main Street. If they want to get people spending money again, the government will have to supply it because the jobs just aren't out there to support our economy.

[KillTheMessenger]

04:53 PM on 07/27/2009

Here is a minor point about "incubation"... you have to have money to incubate. Even if you gave someone a free office, they still have to pay the people, which is many times more expensive than cheap office space. One can get a square foot these days for $1-2. Multiply with 200 for the average office worker and you end up with monthly costs of $200-400 for office space. That's approx. 5% of the real cost to employ that person. It's not even worth mentioning.

[vagabondvet]

12:30 AM on 07/28/2009

Because nationalized Amtrak and the Postal Service are such a marvel of business.

[KillTheMessenger]

01:51 PM on 07/27/2009

Yawn. I could see this coming ten years ago. All it took was to estimate the square footage of all those empty office buildings next to where I work and multiply with $2 per square foot... that's the monthly loss somebody had to absorb for being so insane to overbuild capacity by at least a factor of two.

[moana]

01:26 PM on 07/27/2009

What's with the headlines on HuffPost?