By Ronald D. Orol, MarketWatch
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WASHINGTON (MarketWatch) -- Increasingly worried about the health of mid-sized regional banks with less than $100 billion in assets, the Federal Reserve is working on an expansive review of the commercial real estate loan portfolios of these banks, with expectations that large losses in this asset category could still be coming, according to people familiar with the central bank.
The Fed and other bank regulators are concerned that large regional mid-sized lenders have commercial loan portfolios that have started to deteriorate -- with the largest losses still to occur.
The Fed is expanding its review of commercial loans at these regional banks as part of its existing supervisory process, according to a person familiar with the central bank. She added that the Fed is consulting with other regulators as part of this fact-finding mission.
The central bank is conducting the review, in part, because of lessons learned from stress tests the government conducted on the largest 19 financial institutions in May.
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