Friday, July 30, 2010

"The Numbers Are Not Frightening." Really? reports IMF Says U.S. Financial System May Need $76 Billion in Capital :

The U.S. financial system remains fragile and banks subjected to additional economic stress might need as much as $76 billion in capital, according to the results of International Monetary Fund stress tests.

Agreed. So far, not frightening. But what about this?

The IMF said about $1.4 trillion of commercial real estate loans will mature from 2010 to 2014, almost half of which are already “seriously delinquent,” with payments 90 days or more past due, or “underwater,” with loan values exceeding property values.

For some reason, that does appear at least a bit frightening. The article also says:

The IMF stopped short of recommending recapitalizing the banks it studied in the report. Instead, it urged regulators to monitor conditions, especially for smaller institutions with less market access.

Given the immense influence the U. S. has on the IMF, one can only wonder how severely an uninfluential country in similar condition would have been handled.
Sometimes being too big to be criticized is not good.

$700 Billion in delinquent commercial real estate loans frightens me. Of course, residential real estate is a much larger market. What unrealized, unaccounted-for losses in that field reside on various balance sheets?

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