Fed warns of commercial real estate collapse!
WASHINGTON - October 14, 2009 - The financial system remains fragile and bank exposures to a deteriorating commercial real estate sector present a trouble spot, U.S. Federal Reserve Board Governor Daniel Tarullo said on Wednesday.
"While there have been some positive signals of late, the financial system remains fragile and key trouble spots remain," such as commercial real estate, he told a Senate Banking subcommittee.
"Prices for both existing commercial properties and for land ... have declined sharply in the first half of this year, suggesting that banks are vulnerable to significant further deterioration in their CRE loans," Tarullo said.
He said the economy appears to have resumed growing but warned that it will take time to rebound from the serious financial crisis it endured and jobs won't come back quickly.
"The unemployment rate has continued to rise, reaching 9.8% in September, and is unlikely to improve materially for some time," he said.
"While there have been some positive signals of late, the financial system remains fragile and key trouble spots remain," such as commercial real estate, he told a Senate Banking subcommittee.
"Prices for both existing commercial properties and for land ... have declined sharply in the first half of this year, suggesting that banks are vulnerable to significant further deterioration in their CRE loans," Tarullo said.
He said the economy appears to have resumed growing but warned that it will take time to rebound from the serious financial crisis it endured and jobs won't come back quickly.
"The unemployment rate has continued to rise, reaching 9.8% in September, and is unlikely to improve materially for some time," he said.
