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More mid-size banks face closure from commercial real estate exposure

Staff Report • Apr 29, 2010 at 12:00 AM

According to a Housing Wire report souring commercial real estate loans are taking a disproportionate bite out of ailing mid-size bank balance sheets and more failures are set to come. Regulators shut down seven more banks last week in Illinois. According to the analytics firm, Trepp, the latest moves by the FDIC indicate the agency is focusing its resources toward one problematic region at a time.Bank failures in 2009 increased almost 500% from 2008, according to research from Grant Thornton. At the end of 2009, the FDIC “Problem List” had grown to 702 insured institutions. During 2009 140 U.S. banks failed.Earlier in April, Trepp reported that problematic commercial loans spreading through commercial mortgage-backed securities (CMBS) would plague small and mid-sized banks more than the larger ones. The firm forecasts 200 of these banks will fail this year.Read the full report at the Housing Wire's Web site.

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