A 184 page report released by the Congressional Oversight Panel (COP) this week conclude that unless there is a strong and immediate improvement in the U.S. economy, it is likely to receive yet another sucker punch from the $1.4 trillion in commercial real estate loans coming due over the next three years.
The COP, established by Congress in 2008 to oversee expenditures of the $700 billion Troubled Asset Relief Program (TARP), is particularly concerned about the nation’s small banks, because these lending institutions are responsible for about half of all small business loans.
Of the approximately 8,100 banks in the U.S., 2,988 are small banks that are dangerously exposed to commercial real estate. In addition to the lack of diversification, these community and mid-sized banks also hold high concentrations of the riskiest and least sought-after loans, including transition properties and construction loans in secondary or tertiary markets, according to the panel.
Elizabeth Warren Introduces COP’s February Report