Defaulting Commercial Properties Major Concern for Banks
U.S. banks, battered by record losses from the worst housing slump since the Great Depression, now must weather increasing loan delinquencies from owners of skyscrapers and shopping malls.
The country’s 10 biggest banks have $327.6 billion in commercial mortgages, which face a wave of defaults as office vacancies grow and retailers and casinos go bankrupt.
“The only thing we are facing today in commercial real estate is the fact that we have a weakening economy,” Kovacevich, 65, said in a March 13 speech at Stanford University in Palo Alto, California. “In a weakening economy, you have higher unemployment, you have fewer people who need to occupy office buildings, you have fewer retailers who need to exist.”
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