WASHINGTON -- A congressional oversight panel will hear firsthand in Atlanta Wednesday from regional bankers and real estate brokers about looming problems in the commercial real estate market and the possible effects on the banking industry.
The panel, which oversees the government's Troubled Asset Relief Program (TARP), selected Atlanta as a hearing site because Georgia has had more bank failures than any other state and the region's large commercial real estate market is facing high-vacancy rates and problem loans.
Committee members are concerned that a commercial real estate market meltdown could be the next economic bombshell to rattle the still fragile banking industry.
"Atlanta is a very good case study in what the panel sees as a real coming problem in the commercial real estate market," said Peter Jackson, spokesman for the panel, which is comprised of business and finance experts from government, academia and labor organizations.
What worries the panel is commercial real estate woes will cause more loan defaults and other problems for banks that received TARP funds -- just as the TARP program is beginning to wind down.
Officials are concerned not only about the real estate loans held by giant lenders such as Atlanta-based SunTrust Banks Inc., but also small community banks that could get clobbered if just one or two big commercial loans don't get paid back.
The U.S. Treasury Department has pumped more than $6.2 billion into Georgia banks under the TARP program.
Similar to other cities, Atlanta is coming off a dismal year for commercial real estate. The amount of available office space increased by more than a million square feet last year, pushing the city's office vacancy rate from about 16 percent two years ago to 18 percent last year, according to real estate firm Richard Bowers & Co. Office rental rates also have declined.
Apartment vacancy rates, meanwhile, reached a 30-year high nationally and in Atlanta last year while rents continue to fall.
The meeting, which is open to the public, will begin at 10 a.m. at Georgia Tech.
If you go
WHAT: Public hearing on commercial real estate and banking problems.
WHO: The congressional panel that oversees the TARP banking bailout program; local real estate and banking executives.
WHY: Regulators are concerned that growing signs of problems in the commercial real estate business may cause more banks to fail and default on taxpayer dollars.
WHEN: Wednesday, Jan. 27, 10 a.m.
WHERE: Georgia Tech, Technology Square Research Building, Room132.
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