Over at The Big Picture, Barry Ritholtz’ excellent blog, he’s got a list of the top bank holding companies, sorted by their Commercial Real Estate (CRE) loans.
There are a couple of shocking things on that list. The first is the level of concentration of holdings by those at the top of the list. Wells Fargo, for instance, at the top of the list, holds some $88 billion in CRE loans, or 50% more than the next bank on the list.
Next is the degree to which most banks aggressively expanded their CRE loans over the past year by 10%, 20%, even 40% and more. Wait, what? Does that seem a prudent thing to do over this past year?
At any rate, here’s the list:
Bank Holding Companies Ranked by Commercial Real Estate Loans
(Source)
Just these 30 banks total up to more than $450 billion in CRE loans. If we imagine that losses could run in the vicinity of 50% here (not unlikely given what I’ve been reading and hearing), then this represents another $200 to $250 billion in losses that will have to be capitalized somehow.
My bet? The Fed will simply buy these assets up at 85% or better of face value, and then hide the purchases behind secrecy laws twisted beyond recognition.
However, we learned today that this might be a bit more difficult, as the Fed lost a court case filed by Bloomberg under FOIA, which may result (after all appeals are exhausted, of course) in the release of some limited information regarding the recipients of some of the past Fed funding/largess.
by former_user