Commercial loans “are going to be a bigger driver of bank failures towards the end of this year into next year,” Sheila Bair, Chair of FDIC, told CNBC’s Larry Kudlow Tuesday.
According to Mrs. Bair, residential mortgages are still a bigger percentage of where the credit distress was right now. “I think everybody needs to keep their heads,” Bair said on The Kudlow Report, “there’s some positive news out there on the economy, and even though banks will continue to work through cleaning up their balance sheet, we saw a few glimmers of hope in the second quarter results….I think we just need to say what we’ve always said, that it’s going to take time to work through these credit losses, but we’ll get out of this,” she added.
Bair also said that while it’s too early to call a recovery in the banking sector, the improving net interest margins, and the slowing rate of increase of non-currents and charge-offs was encouraging.
