U.S. banks are at risk of sizable new loan losses, particularly on commercial property, and some banks may not have sufficient capital to fully cushion against losses, a Federal Reserve official said on Monday.
Some large regional and community banks that have built up unusually high concentrations in commercial real estate loans will be “particularly affected” by conditions in those markets, said Jon Greenlee, associate director of the Fed’s Division of Banking Supervision and Regulation.
In the second quarter, said Mr. Greenlee, “Credit losses at banking organizations continued to rise, and banks face risks of sizable additional credit losses given the outlook for production and employment.”
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