Small banks also facing big losses

Former deputy Comptroller of the Currency Robert Bench, now senior fellow at the School of Law’s Morin Center for Banking and Financial Law, says it’s no surprise a Wall Street Journal survey shows more than 900 mid-and small-sized banks could generate losses of $100 billion on commercial real estate loans by the end of 2010.

“It used to be that the ‘business of the U.S. is business.’ In reality, U.S. ‘business’ has been real estate, since so much other business has been outsourced.  As early as 2006, the Comptroller of Currency and the FDIC warned community banks that their exposures to commercial real estate were concentrations of risk that were multiples of the banks’ capital which needed careful managment and/or contraction.”

Contact Robert Bench, 617-353-5428, bobbench@bu.edu 

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