Word: stressful
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...government's recent bank stress test, examiners predicted that commercial real estate loan losses for the 19 largest banks in the nation would be far less than the value of home loans that go unpaid in the next two years - $53 billion vs. $185 billion. But Warren said she thought the two-year horizon of the government stress test may have understated the size of the banks' commercial real estate problem. The government assumed different default rates for each of the 19 banks for commercial real estate and other types of loans. Warren said the government had not given much...
Parkus concurred that the stress tests probably went too light on potential losses. He expects that a little over $1 trillion in commercial real estate loans will be up for refinancing in the next four years. Because of falling real estate prices and lower rental incomes, he said, as many as two-thirds of those loans may not be eligible for refinancing and could end in default...
...With unemployment rising and house prices continuing to fall, Wells' unpleasant earnings news could persist past the end of the year. Bank examiners in the recent government stress tests estimated that Wells Fargo will have as much as $86 billion in loans that go unpaid over the next two years. The bank has already put aside some money to cushion that blow - $22 billion as of the end of March - and Wells would be able to tap another $24 billion of loss provision that it set up when it acquired Wachovia. But that still leaves another $40 billion in loan...
...greater threat to investors springs from the fact that Wells Fargo's loan losses could exceed the government's expectations. In calculating the stress tests, government bank examiners applied different loan-loss rates for different banks. For instance, bank examiners were relatively tough on Wells' primary mortgage-loan portfolio, predicting that nearly 12% of the loans would default over the next two years. This compares to an estimated loss for Citigroup of just 8% for its primary mortgage loans. That makes sense. More of Wells' mortgage loans are concentrated in California than Citigroup. And California has had more foreclosures than...
...Further deregulation is in store: in 2012, national markets, not just international routes, are slated to be opened to more competition. "Travel as we've known it recently is being turned on its head, with larger numbers of people using high-speed rail to avoid the hassles, delays and stress of taking an airplane," says Mark Smith, a U.K.-based industry expert and founder of rail-travel website seat61.com. "On routes of three hours or less, you get to your destination faster and more comfortably than by air. And which is more glamorous these days: a high-tech Eurostar train...