Another One Bites The Dust

I have predicted a significant number of bank failures this year, which hardly took a crystal ball. Well, we are three weeks into the year and we have failure number three.

http://www.calculatedriskblog.com/2009/01/2009-bank-failure-3-1st-centennial-bank.html

Expect more. Local and regional banks are more heavily loaded with commercial real estate and small business loans. Lest you have not read about this, the CRE downturn followed the residential real estate downturn by over a year, but it is catching up. 2009 will likely be a terrible year for commercial real estate, if architect billings are any sign - and they usually are a good leading indicator. Billings by architects remain near record lows and they usually lead CRE construction by a year or more. Now the Obama infrastructure plan could kick start some idled projects, so it is difficult to read where things are heading, but I do expect that local and regional banks are in for a very tough year.

U.K. - Another Iceland?

I wrote briefly on this topic Wednesday, so it is worth noting an article by Nouriel Roubini on the topic. Nouriel does not think the U.K. is in as quite as bad shape as Iceland. Frankly, it would be very hard for a country as big as the U.K. to have banks big enough to get it into the same problem. Yes, RBS and Barclays are significant problems for the U.K. but they are not really comparable to the magnitude of the problem in Iceland. Unlike, Roubini, however, I do think things in the U.K. right now are looking a good bit worse than the U.S. and things are not quite rosy here.

http://www.calculatedriskblog.com/2009/01/roubini-uk-is-not-iceland.html

Disclosures: None