24/7 Wall Street posts on the commercial real estate “land mine” banks have yet to deal with:

“The Financial Times recently reported on data about commercial real estate from Fitch, one of the three large credit ratings agencies. The paper wrote that “Fitch said properties were increasingly financed with no money down or even with loans for more than 100 per cent of a property’s value as owners borrowed greater amounts upfront to pay interest costs, betting that cash flows would improve quickly enough for the property to be self-sustaining.”

This means that what people did on a small scale with home mortgages they did on a larger scale with buildings and malls. General Growth has about $27 billion in debt. It is too early to say how much of that can be recouped though asset sales, but with commercial real estate defaults growing, all of the excess inventory will cause prices to drop, perhaps precipitously.”

Of course credit cards problems are just beginning too and residential has not bottomed either.