“Commercial Property Is Biggest Risk, U.S. Bank Examiners Find” continues:
“Losses on commercial real estate loans pose the biggest risk to U.S. banks this year, troubling smaller lenders while unlikely to threaten the entire financial system, U.S. bank examiners concluded during a review…
“The failure of loans backing malls, hotels and apartments may impede the U.S. recovery as small- and medium-sized banks reduce lending and conserve capital to absorb losses, analysts said. Tight credit could slow the cycle of investment and hiring that is critical for sustained growth, they said.”
WATCHDOG: The Obama Administration encourages the banks to lend. But recognition by regulators and bankers of the impending huge write-downs against capital requirements resulting from troubled commercial loans inhibits them from doing so. In turn, inability to borrow from banks makes it difficult for firms to continue their normal operations, let alone expand.
Clients and developers alike are finding it hard to get financing for any new projects. The banks are stating that there is a glut of unleased or unsold projects that need to move before they will think of starting any thing new.