WORRIES MOUNT OVER REAL ESTATE LOANS

The number of so-called “criticized” commercial real estate loans, those judged to be heading for trouble, rose 144 percent in the second quarter to $26 billion in value among the ten U.S. banks holding the largest volume of those loans, according to a Financial Times report.

A criticized loan is a debt rated CCC or lower by a credit agency, bringing the loan close to junk status.

The rate is more than double the 62-percent increase in criticized loans of all kinds among those banks, the report said.

The banks holding the biggest portfolios of criticized real estate loans include Bank of America, JPMorgan Chase, and Wells Fargo. Loans flashing warning signals make up 9, 13, and 25 percent, respectively, of the banks’ Tier One equity capital, the Times noted, which is a major measure of a bank’s financial strength.

Criticized loans have increased 42 percent across the U.S. banking sector in the second quarter, according to data compiled by Morgan Stanley.

TREND FORECAST: With malls, offices, and apartments emptying at the onset of the “Greatest Depression,” the number of criticized loans will rise and more of them will default as this year progresses.