The sagging commercial real estate sector will not lead to another banking crisis, says Treasury Secretary Timothy Geithner.
A recovering U.S. economy can offset any lag the commercial real estate slump may have on recovery.
“That’s a problem the economy can manage through even though it’s going to be still exceptionally difficult,” says Geithner, according to Bloomberg.
“You can say now with confidence that the financial system is stable, the economy is stabilized,” Geithner said.
“You can see the first signs of growth here and around the world.”
Regulators have pointed out that bad commercial real estate loans could threaten the health of a recovering financial system, and have issued new guidelines for banks to better report on how exposed they are to losses in the sector.
About $500 billion in commercial real estate loans are expected to come due annually over the next few years, according to the Associated Press.
Bank failures for 2009 hit 106 recently, the most since 1992, the year that saw the height of the savings-and-loan crisis.
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