Pretend and Extend Helping the Banking World in Dealing With Commercial Loans

http://www.costar.com/news/Article.aspx?id=CB58F9797974B3A09990193DBF51EC19

In the article accessible via the link above, the CoStar Group reports that Q1 2010 Bank results are better than somewhat expected in regards to continued deterioration of commercial real estate.  The question becomes, however, if we are using the logic “a rolling loan gathers no loss, a.k.a. pretend and extend”

“These improved short-term losses are due primarily to two factors. First, signs of an improving economic environment have decreased loss expectations,” Fitzgerald said. “Second, some write-downs have simply been pushed forward, as external factors, including low interest rates, have enabled banks to push off distress into the future.”

Well worth the 3 minute read.

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