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No Escape From TARP For U.S. Banks Choking On Real Estate Loans


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I think it matters a lot what type of CRE loans we're talking about.  For example, I feel more comfortable with loans secured by apartments.  I feel uncomfortable about loans secured by shopping malls.


Wells has a nice pie chart on page 22 explaining their CRE portfolio allocation:



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yes, I remember Reichardt tenets when making a commercial real estate loan: it is all about people, credit, real estate (old annuals reports from 1991). Loans have to be secured by a cash flow producing asset, with a margin of safety above the interest rate. It is the reason why Wells Fargo don't like very much construction loans.

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