Further losses expected from commercial real estate will continue to pressure the US banking system, the International Monetary Fund has said in its first detailed assessment of the US economy. Delinquent commercial real estate loans in the US are rising, and currently estimated at $60.45bn, or 7.87 per cent.

The Dodd-Frank Act was “an important step forward to address the weaknesses exposed by the global financial crisis,” said the report, issued under the Financial Sector Assessment Program. But stress tests carried out by the IMF noted that “the system would likely remain under pressure due to expected further losses in the commercial real estate sector. And in a scenario in which growth dropped and unemployment remained high, a significant number of U.S. bank holding companies—especially small and medium-sized and regional banks—would need additional capital.” Read more