Credit losses continue on the rise, and banks are facing “sizable additional” losses, particularly as a result of poor demand from credit-worthy borrowers. The picture Greenlee drew suggested that a crisis is still brewing, and possibly yet to peak, in the commercial lending arena, fueled by the sharp declines in the value of commercial properties and land.
More than a quarter of all U.S. residential properties were either in negative “underwater” equity, or very close to that point, as of September, according to an analysis by a real estate data firm. The heaviest concentration of these homes is in states struggling with runaway foreclosure rates.
Small businesses are still facing “substantial constraints” in their access to credit and will restrain from hiring as a result, Fed officials said. Regional and small banks are still vulnerable to the deteriorating performance of commercial loans and they continue to “tighten lending standards.”
Holiday shoppers this season are projected to use their credit cards much less than last year, but an undeterred American Express is serving up some big rewards for some of its card members starting on Black Friday.
On the same day that a 10.2 percent unemployment rate made headlines, here’s another bit of sobering news: Consumer credit fell in September for the eighth straight month. It is the longest, consecutive decline since the Federal Reserve started keeping records of consumer borrowing in 1943. The unemployment rate hit the highest level since 1983.