Commercial Mortgage Loan Exposure; 1400 Banks at Risk

We have reported on this blog that banks and thrifts hold the largest portion of commercial mortgages; upwards of 50%.

 

It stands to reason that with the weakling commercial mortgage market will come a weakening of the banks that hold imprudent amounts.

 

Just how many banks is that? The number is over 1400 nationwide. More than 1400 banks hold 300% or more of their tier one capital in commercial mortgage loans. That’s a-lot of banks and that’s a-lot of capital.

 

Bank regulators consider anything over 299% “excessive” and, so do we.

 

As the economy gets worse vacancy rates will climb, rents will fall, values will fall and many mortgages will go bust. Some of those bankers-gone-wild banks will fail. Exactly how many remains to be seen.

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