"What has been lost in the housing talk recovery is the grim statistics that commercial real estate has fallen 37 percent in value in the last year. This wouldn’t be such a big problem aside from the tiny detail that some $3 trillion in commercial real estate loans are still outstanding. The commercial real estate debacle is already happening with defaults reaching 16 year highs. This is already occurring before many of the commercial real estate loans reach their refinance dates. In some instances banks are simply ignoring non-payment and giving borrowers a few more months or even years. Why? Because they can still claim the note is current and claim the asset at inflated values...
In reality, the CRE implosion is going to take down hundreds of banks in the next few years. Residential lending became a key part of the too big to fail banking model and smaller regional banks simply were unable to keep up. So instead they funded local CRE projects that are now ticking financial bombs on the balance sheet of hundreds of banks..."
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