Capital Economics’ US Economics Weekly released today argues that CRE loan losses pose little risk of bringing down large banks (>$1 billion in assets) as only 18% of these institutions’ loans are CRE. For smaller banks (<$1 billion in assets) the risk of CRE losses causing bank failures is much greater since 40% of their loans are CRE. While both the default and charge off rates have been increasing dramatically, they do not see them reaching levels on a system-wide basis that would call the viability of the sector into question.
Does your calculation of an institution’s CRE loan portfolio include only loans or does it also include CMBS/CDO positions?
Comment by JWalker — October 19, 2009 @ 3:35 pm |
It appears from Capital Economics’ report that they have included all loans, including “balance sheet” loans and CMBS/CDO, but I have not yet been able to verify this.
Comment by creblogger — October 20, 2009 @ 8:52 am |
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