Commercial Real Estate Is Snake In The Grass For Banks

By Douglas A. McIntyre Updated Apr 27, 7:19PM EDT · Published Mar 26, 4:53AM EDT

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The price of bank stocks is some indication that Wall St. believes that the industry is coming out of the woods. But, even if toxic assets can be sold off of bank books under the Treasury’s new public/private investment plan, there are still landmines sitting in the path of improving earnings.

Among the problems still facing banks are consumer credit defaults and LBO loans. But, as The Wall Street Journal points out, the greatest danger may be commercial real estate loans.

According to the paper, “Some experts say it now looks as if the current commercial real-estate slump will rival or even exceed the one in the early 1990s, when bad commercial-property debt played a big role in dragging the economy into a recession.” Over the next two or three quarters, banks will start recognizing those losses which could push the recovery of financial firm earnings out another year or more. And, just as bad, it may force banks to raise more capital in a market where many institutions were burned by the round of money they put into the companies a year ago.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.