The expected massive bank failures will further curtail lending (including home mortgages) and result in further softening of home prices, particularly in over-built areas of the US.
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Thursday, May 7, 2009
Commercial Real Estate Loan Defaults Will Sink Big Banks
I have read many articles that are stating facts that the mainstream media is not covering. The most important one is that commercial real estate loans are defaulting at an alarming rate. While the mainstream media continues to debate whether or not the residential housing bust has reached it bottom they continue to ignore the greater problem of bad commercial real estate loans. My prediction is that the commercial real estate loan defaults will finish the bank killing that the residential bubble bursting started. I believe that most, if not all, of the major national banks (think Wachovia, Bank of America, Wells Fargo, etc.) will need to be nationalized within 12 months.