Fed's Greenlee Offers the Ugly Commercial Real Estate Stats and Muted Prospects for Growth ...

WASHINGTON (Dow Jones)-- Federal banking examiners continue to see sharp deterioration in the credit performance of commercial real estate loans held by U.S. banks, the Federal Reserve's associate director of banking and supervision said Monday.

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In a speech before the House Financial Services Subcommittee on Oversight and Investigations, the Federal Reserve's Jon Greenlee noted that about 9% of commercial real estate loans in bank portfolios were considered delinquent at the end of the second quarter.
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Banks at the end of that quarter held approximately $3.5 trillion in outstanding debt related to commercial real estate loans, he said.
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Banks struggles with commercial real estate loans, however, are only part of the challenge facing the financial sector going forward.
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"Corporate bond spreads are high by historical standards as expected losses and risk premiums remain elevated," Greenlee, who was speaking in Michigan, said.
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He expects credit conditions will remain tight for small businesses even as demand is muted because of sluggish growth prospects.
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-By Meena Thiruvengadam, Dow Jones Newswires; 202-862-6629; meena.thiruvengadam@dowjones.com
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(END) Dow Jones Newswires
November 30, 2009 11:00 ET (16:00 GMT)
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