(Source: Associated Press)

Rising losses on commercial real estate loans will continue to hurt U.S. banks in coming months and pose the biggest challenge for many financial institutions and their overseers, regulators said Wednesday.

Real estate loans will continue to be “the most prominent area of risk” for banks over the next several quarters, Federal Deposit Insurance Corp. Chairman Sheila Bair told lawmakers at a Senate hearing.

With more than 7 million jobs lost in the recession, office space has sat empty and developers have defaulted on their loans. The $6.2 billion in loans backed by commercial properties that banks wrote off as lost in the past two years will likely grow sharply as more loans come due, Bair said.

Nearly $500 billion of the loans are expected to come due annually over the next few years.

Read Marcy Gordon’s full article “Bank regulators: real estate loans biggest concern” in the Associated Press (October 14, 2009).

Developments featured in this article

More Like This

Facebook Chatter