Commercial real estate loans gone bad imperil banks


It's no secret that one of the biggest dangers facing banks today is that loans to builders of office towers, malls and other commercial properties are going sour at a quickening pace. Financial regulators, including Fed Chairman Ben Bernanke and Federal Deposit Insurance Corp. chief Sheila Bair, have warned of the risk. Now one research shop is predicting those losses will get a lot worse.

Real Estate Econometrics, a New York-based consulting and analytics firm, predicted Tuesday that delinquencies among commercial real estate mortgages held by banks will surge to 4% by the end of this year. That's after doubling to 3.4% in the third quarter compared with the same period in 2008, the firm said in a report.