by Calculated Risk on 4/11/2007 05:17:00 PM

From Bloomberg: Commercial-Mortgage Risk Forcing Change, Moody's Says (hat tip Brian)

Moody's Investors Service ... will require more protection for investors in securities backed by mortgages on apartment buildings, offices and other commercial properties because of "a continued slide" in lending standards.
emphasis added

Clearly the incipient credit crunch has moved beyond subprime.

From this previous post: Commercial Bank Exposure to Real Estate: We know, from the FDIC Semiannual Report that the concentration of CRE and C&D loans has increased:

Small and mid-size institutions have been increasing their concentrations in riskier assets, such as CRE loans and construction and development (C&D) loans. This suggests that, although small and mid-size institutions have been more successful in limiting the erosion of their nominal NIMs, they have achieved this success in part by assuming higher levels of credit risk.

... continued increases in concentrations and reports of loosened underwriting standards at FDIC-insured institutions signal the potential for future credit quality deterioration. In addition, regulators have noted increasing C&D and overall CRE loan
concentrations, especially at institutions with total assets between $1 billion and $10 billion.

The housing crisis is now front page news, but there is little discussion about U.S. bank exposure to CRE loans. If a CRE slump follows the residential real estate bust (the typical historical pattern), then the mid-sized institutions might have a serious problem.