Commercial Real Estate Losses Mounting for US Banks
Patrick Parkinson, who serves as the director of banking supervision and regulation for the Federal Reserve, told Congress Friday that US banks have only so far absorbed a fraction of the total commercial real estate losses they will eventually incur. He went on to say that while banks continue to deal with the strain of the mounting losses, it doesn't appear as if any banks that are vital to the nation's financial system are in immediate danger.
"While we expect significant ongoing CRE-related problems, it appears that worst-case scenarios are becoming increasingly unlikely," Parkinson said to a Congressional panel. The remarks were part of Parkinson's testimony before the Congressional Oversight Panel reviewing efforts to stabilize the U.S. Financial system following the 2008-2009 financial crisis, the worst in the US since the Great Depression.
Parkinson pointed out that commercial US banks have incurred close to $80 billion in losses from failed commercial real estate investments since 2008's first quarter. He estimated that that figure will represent between 40 and 50 percent of total losses related to the collapse in commercial real estate.
|
