Bad as commercial real estate is right now, New York real estate mogul Mort Zuckerman says that credit card defaults will be much worse than commercial real estate defaults.
He estimates they have already reached “hundreds of billions of dollars.”
“There are gigantic numbers of credit cards that are going to go into default,” for both businesses and consumers, Zuckerman told CNN.
"The number of credit cards for business went from five million in 2000 to 29 million today," Zuckerman says.
"There's $300 billion of exposure on that ... and businesses are defaulting on their credit card payments at a rate even faster than individual consumers.
“I don’t think we’re out of the credit crunch.”
“If you read the reports from the banks, the biggest losses they were suffering was in their credit card obligations,” Zuckerman says.
Banks know the trouble they’re about to face, he notes — which is why they are hoarding their cash instead of making loans.
Some parts of the commercial real estate market are worse than others, Zuckerman observes, especially those that have payments coming due and can’t get their loans refinanced.
The problem, Zuckerman says, is not necessarily one of occupancy, but one of financial structure.
At some banks, the commercial real estate crisis has already arrived, The Wall Street Journal reports, and could well foreshadow the heavy losses at regional lenders in quarters to come.
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