Monday, March 29, 2010

Elizabeth Warren: Half of commercial RE mortgages to be underwater

Bad news for commercial real estate and the economy:
By the end of 2010, about half of all commercial real estate mortgages will be underwater, said Elizabeth Warren, chairperson of the TARP Congressional Oversight Panel, in a wide-ranging interview on Monday.

“They are [mostly] concentrated in the mid-sized banks,” Warren told CNBC. “We now have 2,988 banks—mostly midsized, that have these dangerous concentrations in commercial real estate lending."

As a result, the economy will face another “very serious problem” that will have to be resolved over the next three years, she said, adding that things are unlikely to return to normalcy in 2010.
I agree with this:
Speaking on troubled mortgage lenders, Warren said it’s time for the government to "pull the plug" on mortgage lenders Fannie Mae and Freddie Mac.
I also think we should pull the plug on AIG and the FHA. AIG is a zombie. The FHA is just getting into deeper and deeper financial trouble, all in an effort to prop up home prices above their intrinsic value.


  1. Zombies are kept alive for the sake of the system. There is no other reason to tolerate them. So as soon as they have sold their last piece of themselves, they will be wound down.

    But this is not a market economy any more. Get over it. I did.

  2. The zombies are being bailed out because of faulty economic models. Its the same thing Japan did, and the zombie bailouts kept their economy sub par for decades.

  3. Politician, he/she who WOULD never do what he/she SHOULD do.

  4. The big error in this bloggers thought process is he values efficiency more than he values humanity.
    He may well know economics but he obviously doesnt know history.
    When you ignore the day to day human issues of your citizens bad things of one stripe or another always happen.
    This country was dangerously close to turning facist in the 1930's for instance.
    Obviously the social programs of FDR were the human course of action.
    The result for America was decades of future prosperity.

  5. We are paying for that prosperity for the next 50 years... peace.