bank failures: The Atlanta Fed Expresses Concern Over Rising Commercial Defaults - 10/07/09 02:07 AM
A recent report issued by a real estate expert at the Atlanta Fed expresses concern over rising commercial loan defaults. With vacancies in apartments at a 23 year high, strip malls vacancies the highest in 17 years and with rising problems in office rentals, hotels, warehouses, and other commercial ventures, owners are faced with rapidly declining revenues.
 
Some experts have suggested that commercial real estate values will drop by 50% or more, and the falling values will make it impossible for owners to refinance. With approximately $3.5 trillion in outstanding commercial real estate loans, the Fed is concerned by the … (14 comments)

bank failures: Banks Seem More Stressed-Out Than Stress-Tested - 09/05/09 02:15 AM
Perhaps the bank “stress tests” should have included a prescription for Valium, for many banks seem more stressed-out than stress-tested. When the results of the bank stress tests were announced, the government proudly proclaimed that the banking system was sound, that banks would be able to handle whatever adversities the economy could dish out. The results also showed an expected baseline for unemployment and a worst case scenario, and Treasury Secretary, Geithner assured us that their calculations demonstrated that our banking system could withstand a worsening economy.
 
But the stress tests didn’t imagine that the economy might sink below their … (11 comments)

bank failures: Bank Failures Not Just A Problem For Consumers - 08/17/09 04:31 PM
With the fall of more banks this past weekend, it’s not just the loss of a few banks that is a problem. We’ve yet to reach a point of shortage. No, a major and often unnoticed problem is the additional stress placed upon the FDIC which is rapidly depleting its bank guarantee fund.
 
An article in the Wall Street Journal describes the impact upon the FDIC. While the total of 102 bank failures since the beginning of this recession may seem relatively small, a quick glance over the list of troubled banks shows that dozens more are near collapse.
 
(6 comments)

bank failures: Why Georgia Leads the Nation in Bank Failures - 07/26/09 02:32 PM
With a rash of Georgia bank failures this past week, many are scratching their heads wondering why Georgia leads the nation in bank failures. A superficial look into the numbers would indicate a more severe problem than actually exists. While the state has been hard hit by the recession—Georgia’s jobless rate is about a half point ahead of the national average—the local economy is in far better financial condition than many others.
 
In order to understand the disparity, giving Georgia 1/3 of all bank failures since the beginning of the recession, one only has to look at the total number … (8 comments)

bank failures: Commercial Loan Defaults--OR--We're Running Out Of Shoes - 07/02/09 06:12 AM
It seems the economy keeps finding the other shoe to drop; and as one sector tanks and begins to show signs of stabilization, another shoe falls, changing the outlook. While we’ve been hearing of the trouble in commercial real estate, it’s no longer just talk.
 
The problems caused by the surge in commercial defaults is beginning to echo throughout the economy. Banking, notwithstanding the exaggerated positive news from the “stress tests,” is still struggling to overcome the problems encountered in the collapse of residential real estate values; and the banking industry is about to be dealt a serious blow. In … (4 comments)

bank failures: More Trouble for the FDIC - 05/27/09 08:54 AM
As many have predicted, the number of banks on the FDIC “troubled banks” list is growing. With the already weakened condition of hundreds of banks, and with them now taking hits from defaulting commercial and development loans, demands on the FDIC insurance fund have increased significantly.
 
At the end of 2008 the FDIC listed 252 troubled banks with combined assets of $159 billion. Now, however, the number of at risk banks has been increased to 305, with combined total assets of $220 billion. The rising number significantly increases the potential liability to the Deposit Insurance Fund, and will require additional … (6 comments)