December 8, 2007 (LPAC)-- The galloping wreckage of the global financial system has passed home mortgages, and is now upon the commercial real estate sector, where construction loans financing condominium projects and other commercial ventures are increasingly being classified as behind in payments or 'non-performing'.

Many of these loans, today's New York Times reports, are held by small and middle-size banks that have moved into construction loans as they were squeezed out of other financial areas by the large banks. Banks with under $10 billion in assets are exposed to construction loans twice as much today as they were in 1989. For many small banks, especially those in condominium-crazy South Florida, this double exposure will force doors to close, unless the banks are protected by a firewall, such as LaRouche's Home Owner and Bank Protection Act of 2007.

Some of the banks currently show larger assets in dead loans than they list as their total capital-- this means bankruptcy. A Nov. 27 article in TheStreet.com contained a list of Florida banks, charting their exposure to non-performing assets. One, Coast Bank of Florida, had a ratio of non-performing assets to core capital and reserves of 135%! Six Florida banks had ratios over 70%, whereas a decade ago, 30% would have been the norm. Many of these bad loans are construction loans. More than three percent of construction loans now fall into the non-performing class.