500 More Banks to Fail By End of 2010: Wilbur Ross
The list of failed bank continues to grow as the FDIC’s troubled bank list currently stands at 416 troubled banks. Wilbur Ross, chairman and CEO of WL Ross & Co. explained that he expects to see further trouble ahead for banks.
“I’m not surprised that the [FDIC’s] list is continuing to grow,” Ross told CNBC. “I think there’s going to be at least 500 more banks fail between now and end of next year.”
Ross said commercial real estate is the currently the biggest problem for banks as opposed to residential.
“The first wave of the big banks were the securitizations," he said. "The regional banks are the ones now going down. They mostly didn’t have much in the way of securitization but they all have construction loans, they have development loans, they all have loans on little shopping centers and they’ve got that kind of portfolio very heavily.”
In the meantime, Ross said the FDIC recently developed a system to get rid of Alt-A loans through bidding and said investors can benefit from the distressed assets.
“Yesterday, the FDIC held an auction for $1.3 billion of Alt-A loans, or liars loans, coming out of the failed Franklin Bank,” he said. “So that’s the first time FDIC has had an auction with them providing leverage to distressed investors. So we were bidders on it...I think it’s a good system that they’ve developed for getting rid of these assets.”
- Commercial Loans Biggest Threat to Banks: FDIC’s Bair
No immediate information was available for Ross or his firm.
CNBC's Companies in the News:
- Pfizer Paying $2.3 Billion to Settle Marketing Charges
- BP Makes 'Giant' Oil Find in Gulf of Mexico
- Nokia Bolsters Phone Lineup, Enters Laptop Market