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Big Losses Loom at Small Banks

By Neal Colgrass, Newser Staff

Posted May 18, 2009 8:15 PM CDT

(Newser) – Small and midsize banks across America could face $100 billion in losses from commercial real-estate loans next year, shrinking their capital in most cases to scary lows. The Wall Street Journal conducted worst-case-scenario stress tests on 900 banks and found crises looming far beyond Wall Street. Small and midsize banks "are in just much worse shape" than major banks, one analyst said.

Facing losses that could top $200 billion in all, these mom-and-pops and bigger regional banks are unlikely to attract capital to shore up accounts. That could mean fewer loans, more regulations, and a slew of bank failures. But at least one bank denied the findings. "We don't see anything along the lines you're saying," said the chairman at Truman Bancorp, which plans to issue up to $10 million in shares to restore depleted capital.

People enter First National Bank in Staunton, Ill., Wednesday, April, 8, 2009. (AP Photo/Seth Perlman)

People walk in the early evening Friday, April 3, 2009, past First National Bank and Trust Company in Newtown, Pa. (AP Photo/Mel Evans)

The Mansfield Community Bank in Mansfield, Texas, Wednesday, April 8, 2009. (AP Photo/LM Otero)

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More Newser Stories

Bank Failures Far From Over

Failures down in 2011, but weak banks are taking longer to recover or die

To Get New Credit Card: Pay Off Expired Debt?

Feds have fined debt collector for deceptive practices

Lobbying Firm to Banks: We'll Cripple Occupy

Former Jay Boehner employees drummed up $850K plan

How a College Grad Helped Sink BofA's Debit Card Fee

'That is it. I'm sick of this,' Molly Katchpole said of the bank plan

Why Wall Street Is Richer Than Ever

Firms are more profitable under Obama than Bush: 'Washington Post'

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Big Losses Loom at Small Banks

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OTHER STORIES ON OUR RADAR

credit crisis • commercial real estate • banks • stress tests

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

Bank Failures Far From Over

Failures down in 2011, but weak banks are taking longer to recover or die

To Get New Credit Card: Pay Off Expired Debt?

Feds have fined debt collector for deceptive practices

Lobbying Firm to Banks: We'll Cripple Occupy

Former Jay Boehner employees drummed up $850K plan

How a College Grad Helped Sink BofA's Debit Card Fee

'That is it. I'm sick of this,' Molly Katchpole said of the bank plan

Why Wall Street Is Richer Than Ever

Firms are more profitable under Obama than Bush: 'Washington Post'

About Us

Site

Newser By Users

Community

Site Maps

Tools

More News

What is Newser?