D.C.-area developer Jeff Neal gives the Huffington Post Investigative Fund a tour of empty commercial properties just blocks from the Capitol. Hundreds of small and medium-sized banks are facing huge numbers of possible defaults by builders who erected thousands of office towers, condominiums and shopping centers with the easy credit available five years ago.
“Commercial real estate loans generally have terms of five to seven years. Many of the loans issued at the height of the credit bubble are coming due. By mid-November, $150 billion worth of commercial properties, about 7,500 in total, were in distress, according to Real Capital Analytics Research,” reported The Huffington Post. More than 400 banks are on a problem list maintained by the Federal Deposit Insurance Corp, largely as a result of commercial debt.
Referring to the malaise of commercial real estate, Michael Stevens, senior vice president for regulatory policy at the Conference of State Bank Supervisors, said: “It’s not the next big thing. It is the big thing. We’re dealing with it right now. We wouldn’t be at 120 bank failures if we weren’t seeing it now.”
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Source: YouTube and The Huffington Post, November 20, 2009.
