“We saw a few glimmers of hope with credit losses, though it is still too early to tell”
“CRE is a looming problem and will be a bigger driver of bank failures….Residential is still a bigger issue, but commercial is catching up and I do think it will be a bigger driver of bank losses and failures.”
On “going slow” on bank closures:
“The FDIC does not mandate bank closures. That is the job of the OTC or other regultor. ..its the primary regulators call as to when a bank is closed”
Commentary: It is not terribly surprising that commercial real estate will be a bigger driver of bank failures. Anecdotally, commercial banks, with which I have had experience, package their residential loans and sell them to investors as securities. Although volume of commercial mortgage securities (such as CMBS) increased dramatically over the last decade, by and large, commercial loans (with larger margins than residential loans) have been portfolio holdings, particularly with community banks.
