Monday, April 5, 2010

The Next Bubble About To Burst?

The first was the housing bubble. Too many sub-prime houses that went underwater. Meaning that the price that was owed on the house was more than what the property value is actually worth.

Now? The commercial real estate bubble is teetering.

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. . .

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