Banks Are Keeping More Loans on Their Books

Mark Gongloff reports in WSJ.com that U.S. commercial banks are keeping more of the loans they make on their balance sheets.

Total assets at U.S. commercial banks swelled to $11.12 trillion in early April, up from $9.94 trillion a year ago, according to Federal Reserve data that are updated every Friday. Last month, the growth rate of bank assets hit its fastest growth pace in 28 years.

As Mark states, one of the problems that occurred in the CMBS market was that lenders were not keeping an interest in the loans they originated. They were just producing the paper to package into a stream of CMBS offerings. Banks forgot that they were making loans and that the loans would have to be managed.

Prior to the CMBS, when negotiating documents, the "no" response was that the change would reduce the value of the paper. I was not hearing that it would affect the lender's ability to manage the loan.