US commercial loan crisis - time bomb waiting to explode

For all you bears waiting to get into action:

Half of the roughly $1.4-trillion (U.S.) worth of commercial loans coming due over the next four years are already "under water" and could trigger bank losses reaching as much as $300-billion per year, according to a Congressional oversight panel report released in February.

"A significant wave of commercial mortgage defaults would trigger economic damage that could touch the lives of nearly every American," the 189-page report concluded.

"In the worst case scenario, hundreds more community and mid-sized banks could face insolvency ... Their widespread failure could disrupt local communities, undermine the economic recovery, and extend an already painful recession."

America’s 8,100 banks hold about $1.5 trillion in commercial real estate (CRE) mortgages, all but $1 trillion of which must be refinanced in the next four years.

About 3,000 small banks will be disproportionately hard hit by the failed refinancing. These banks have what the Government calls “CRE concentration”, with CRE loans equal to at least 300 per cent of total capital.

The entire article can be found here:
http://www.globeinvestor.com/servlet/story/GAM.20100212.IBUSECONOMY12ART1937/GIStory/

http://business.timesonline.co.uk/tol/business/economics/article7023861.ece