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Wall Street Journal Sees Another Blow to Banks

Today's WSJ discusses the burden of commercial real estate (CRE) mortgage defaults over the next two years here.

 LINGLING WEI and PETER GRANT quote Deutsche Bank sources that estimate $100 billion in CRE mortgage loans will have difficulty refinancing when current terms end by 2012.  They also state that CRE loan failures are already contributing to bank failures, even though the bulk of the problem has yet to arrive.

To put $100 billion in perspective, it is equivalent in dollar amount to 400,000 residential mortgages averaging $250,000 each defaulting.  This is a small fraction of the most pessimistic estimates of potential totals in remaining residential mortgage defaults (several hundred billion, or even over $1 trillion), but it certainly is adding more than a few straws to the camel's back.