The WSJ has published an article that draws comparisons between the housing bubble and subsequent collapse that we witnessed culminate last year, and the commercial real estate portfolios that exist on the balance sheets of many banks.
The summary is that many banks are being slow to recognize the losses that exist on the loans they have made, and the Fed is watching with great concern the mounting vacancy rates and declining property values that form the foundation of many of these loans. The Fed is trying not to be caught with its pants between its ankles like it was with the housing bubble, and is keeping a close eye on the balance sheets of the more highly leveraged banks.
This could have a similar effect on bank stocks that the housing collapse had. As losses mount, more and more reserves are used up to cover the losses until the bank finally becomes insolvent. While the Fed has not formally said anything about the problem, the WSJ says that an internal review has been going on for months, and is increasing in intensity.
Disclosure: Long GS and JPM, but maybe not for much longer…