WASHINGTON, DC-The Congressional Oversight Panel, set up to monitorTARP, is sounding the alarm over banks’ vulnerability to fallingcommercial real estate values and the trouble many owners will have inrefinancing debt that is coming due.

The agency cites figures that have become route knowledge within theindustry: Between 2010 and 2014, about $1.4 trillion in commercialreal estate loans will reach the end of their terms. Nearly half areunderwater as commercial property values have fallen more than 40%since the beginning of 2007. Increased vacancy rates continue toexert a powerful downward pressure on the value of commercialproperties.

It will be the smaller regional and community banks–which have higherconcentrations of such loans–that will experience a disproportionateshare of defaults, compared to larger national or money center banks,the report found.

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