Trepp senior managing director Manus Clancy has both good newsand bad news for the commercial real estate finance markets. Thegood news is that the number of bank failures have clearly reacheda plateau, he says. The bad news? That plateau is still too highfor comfort.

In the first half of 2011, bank failures numbered 48, Trepp datashows. It is a significant drop from either the 86 failures in thesame period of 2010 or the second half of that year, when 74 banksfailed.

Still, the New York City-based Clancy doesn't think the failurerate will trend significantly down for at least another year ortwo. There are still many problem banks, largely community lenders,currently under review with regulators. Then there's the fact thatthe assets weighing down many of these banks are real estateholdings in secondary or tertiary markets: the very sort of assetthat is likely to be underwater. "The trophy stuff tends to be withthe CMBS lenders," he says.

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