Fed Expanding Review of Regional Banks’ Commercial Loans Portfolio

Fed Expanding Review of Regional Banks’ Commercial Loans Portfolio

http://www.marketwatch.com/story/bank-regulators-eye-commercial-loan-problems-2009-09-16

The Federal Reserve is increasingly worried about the health of the regional banks having assets less than $100 billion and has expanded a review of the commercial loans portfolios of these banks. These portfolios have already started to deteriorate and the largest losses in the segment are yet to occur, the fed officials believe. The Fed along with the help of the other regulators plans to review the various categories such as hotels, construction and retail of commercial loans and identify the potential losses. A recent report by the Congressional Oversight Panel overseeing the US government’s $700 billion TARP has also warned against the threat imposed by the commercial loans and the residential mortgages to smaller public banks. The regulators expect many more bank failures in the future and are trying to identify them through this review of their asset portfolios.