Half of Commercial Mortgages to Be Underwater: Warren
ELIZABETH WARREN, BANKS, TARP, BANKING, OVERSIGHT, GOVERNMENT, ECONOMY,
CNBC.com
| 29 Mar 2010 | 07:04 PM ET
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.
âThey are [mostly] concentrated in the mid-sized banks,â Warren told CNBC. âWe now have 2,988 banksâmostly midsized, that have these dangerous concentrations in commercial real estate lending."
As a result, the economy will face another âvery serious problemâ that will have to be resolved over the next three years, she said, adding that things are unlikely to return to normalcy in 2010. (See the video below for the full interview.)
Meanwhile, the U.S. Treasury on Monday pledged to sell its 7.7 billion Citigroup shares this year, a step that further reduces the government's influence on the banking giant. Warren said she is having difficulty getting clarity on Citigroupâs business plans.
âThis is a cake that is still being baked,â she said of the company's plans. â[Citi's CEO] Vikram Pandit said he was going to shrink the company by 40 percent...and Citiâs numbers keep moving around so much I donât know.â
Speaking on troubled mortgage lenders, Warren said itâs time for the government to "pull the plug" on mortgage lenders Fannie Mae and Freddie Mac .
âIâm one of those people who never liked public-private partnership to begin with. I think what they did was use public when public was useful and private when private was useful,â she said. âAnd I think weâve got to rethink that whole thing.â
âThere is no implicit guarantee anymore,â she added. âI donât care how big you are, if you make serious enough mistakes, then your business can be entirely wiped out."
http://www.cnbc.com/id/36085517
ELIZABETH WARREN, BANKS, TARP, BANKING, OVERSIGHT, GOVERNMENT, ECONOMY,
CNBC.com
| 29 Mar 2010 | 07:04 PM ET
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.
âThey are [mostly] concentrated in the mid-sized banks,â Warren told CNBC. âWe now have 2,988 banksâmostly midsized, that have these dangerous concentrations in commercial real estate lending."
As a result, the economy will face another âvery serious problemâ that will have to be resolved over the next three years, she said, adding that things are unlikely to return to normalcy in 2010. (See the video below for the full interview.)
Meanwhile, the U.S. Treasury on Monday pledged to sell its 7.7 billion Citigroup shares this year, a step that further reduces the government's influence on the banking giant. Warren said she is having difficulty getting clarity on Citigroupâs business plans.
âThis is a cake that is still being baked,â she said of the company's plans. â[Citi's CEO] Vikram Pandit said he was going to shrink the company by 40 percent...and Citiâs numbers keep moving around so much I donât know.â
Speaking on troubled mortgage lenders, Warren said itâs time for the government to "pull the plug" on mortgage lenders Fannie Mae and Freddie Mac .
âIâm one of those people who never liked public-private partnership to begin with. I think what they did was use public when public was useful and private when private was useful,â she said. âAnd I think weâve got to rethink that whole thing.â
âThere is no implicit guarantee anymore,â she added. âI donât care how big you are, if you make serious enough mistakes, then your business can be entirely wiped out."
http://www.cnbc.com/id/36085517
