Commercial <b>Real Estate</b> Still A Strain: Fed Official

Commercial Real Estate Still A Strain: Fed Official HPFB.init();
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Commercial Real Estate Still A Strain: Fed Official

First Posted: 02/ 4/11 09:43 AM Updated: 02/ 4/11 09:43 AM

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Read More:Business News, Commercial Real Estate, Congressional Oversight Panel, Cre, Federal Reserve, Patrick Parkinson, Business Newsshare this storyPatrick Parkinson, the Federal Reserve's director of banking supervision and regulationGet Business AlertsSign UpSubmit this storydiggredditstumble

WASHINGTON (Reuters) -- A top government financial regulator said on Friday banks have taken only about half the hit they will experience from commercial real estate losses, and that while banks will remain under strain from commercial properties, no systemically important firms appear at risk.

"While we expect significant ongoing CRE-related problems, it appears that worst-case scenarios are becoming increasingly unlikely," Patrick Parkinson, the Federal Reserve's director of banking supervision and regulation, told Congress.

Parkinson is due to testify before the Congressional Oversight Panel that is reviewing efforts to stabilize the financial system after the financial crisis of 2008-2009. A copy of his testimony was obtained by Reuters.

Parkinson said that since the beginning of 2008 through the third quarter of 2010, commercial banks had incurred almost $80 billion of losses from commercial real estate exposures. Banks are estimated to have taken roughly 40 percent to 50 percent of losses they will incur over this business cycle, he said.

"Even if CRE delinquency metrics continue improving, there remains a sufficiently large overhang of distressed CRE at commercial banks such that loss rates for this portfolio will likely stay high for some time and many banks with CRE concentrations will remain under stress," he said.

Parkinson said that some systemically important financial firms had large exposures to commercial mortgage-backed securities and derivatives such as commercial real estate collateralized debt obligations. However, he said risks in those areas had been reduced and significant markdowns had already been applied to those securities.

Banks with high concentrations of commercial real estate loans tend to be those with between $1 billion and $10 billion in assets, of which one third had high concentrations of such loans, he said. Among banks with $10 billion or more, 10 percent had high concentrations of commercial real estate loans.

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"CRE concentrations are not a significant issue at the largest banks," he said.

However, Parkinson said losses due to commercial real estate, particularly residential construction and land development lending, were a chief reason for the high number of bank failures since 2008. Regulators expect further bank failures due to commercial real estate losses over the next few years, he said.

Regulators are encouraging loan restructuring to reduce losses, he added.

Copyright 2010 Thomson Reuters. Click for Restrictions.

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The Fed WASHINGTON (Reuters) -- A top government financial regulator said on Friday banks have taken only about half the hit they will experience from commercial real estate losses, and that while banks will... WASHINGTON (Reuters) -- A top government financial regulator said on Friday banks have taken only about half the hit they will experience from commercial real estate losses, and that while banks will... Related News On Huffington Post:  
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Post to Facebook.Post to Blogger.Post to Twitter.Post to WordPress.Post to TypePad.Post to Tumblr.Post to Yahoo! View All Recency  |  Popularity ta8ersalid   0 minute ago (2:53 PM) 84 Fans "CRE concentrat­ions are not a significan­t issue at the largest banks," he said.

If you believe the above, I have a bridge for sale, going cheap. ta8ersalid: "CRE concentrations are not a significant issue at the largest http://www.huffingtonpost.com/social/ta8ersalid/commercial-real-estate-st_n_818605_76309327.html Permalink  | Share it HUFFPOST SUPER USER jwilson1   3 hours ago (12:18 PM) 58 Fans 1/2 of the losses...y­ou people are disgusting when you think of the millions of decent folks who lost their home through no fault other then the banks issuing CDO's. These banks have a big debt to pay instead of the trillion they lost the American people.

Your article sucks it should be about the fraud they did not the money it cost them how about the global melt down they caused! jwilson1: 1/2 of the losses...you people are disgusting when you think http://www.huffingtonpost.com/social/jwilson1/commercial-real-estate-st_n_818605_76289331.html Permalink  | Share it     New comments on this entry — Click to refreshLoading comments… Follow Huffington Post Loading twitter module... Most Popular on HuffPostadYQBqpv2JPt0kS7hFlIdQijVx4eQxBhnJ2awIiJzVo6TEpYjTSy9eV5uEjrPD3tYotxxID4gBGfwPbMVr%2F%2FXw%3D%3DWv1Rs2sm35E8Zlyxm8BDMq4djlnFQECVjca0OPNpVycSJB6I1XBmKuc%2FwB3SQv2Jz9cXSfNc5tOT09CxLbQyIA%3D%3D1 of 2 Anderson Cooper Attacked By Pro-Mubarak Mob
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