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Failing loans for commercial real estate threaten small banks

Staff Report • Sep 10, 2009 at 12:00 AM

USA Today is reporting that bank stocks recovery from the residential real estate crisis might be diverting attention from the commercial real estate threat. Commercial real estate loans are souring at an "unprecedented," a recent report from Deutsche Bank said. The delinquency rates 4.1% in June, more than double the March rate. Banks are most vulnerable because they hold about $1 trillion of commercial real estate loans and an additional $530 billion in construction loans.It is especially noxious for the smallest banks, which have very large portions of their loan portfolios exposed. Regional banks are also highly exposed and are a bigger worry for the economy because many are large. Read the full report on the USA Today web site.

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