As General Growth goes into Chapter 11, banks sweat
Filed under: Company News, Economy
General Growth Properties (GGP), the big mall operator, will file for Chapter 11. According to The Wall Street Journal, which broke the story, "Many analysts suspect General Growth will survive a lengthy bankruptcy intact, but perhaps smaller after selling properties, without resorting to liquidation."
That may be so, but some big commercial banks could face large write-downs from their exposure to General Growth if a bankruptcy judge voids or cuts down the value of any of the company's debt obligations. General Growth says that it has about $24 billion in debt.
The mall company has outstanding loans with Citigroup (C) and Goldman Sachs (GS), among other financial companies.
The most obvious question to arise from the General Growth bankruptcy is how many more commercial real estate debt defaults are in the offing. The answer is almost certainly a very large number. But since it is hard to define the scope of the problem, it is impossible to tell how badly already weakened banks will be hit as property owners collapse.
Banks have tens of billions of dollars in write-offs coming over the next few quarters as the commercial real estate market craters.
Douglas A. McIntyre is an editor at 24/7 Wall St.



























Reader Comments (Page 1 of 9)
4-16-2009 @ 9:07AM
nick said...
Here is another one to chalk up to the Obama slime machine. Business can see right through this slime ball. The only thing this guy is good for is slinging his BS around. And his little buddy with the foot in the mouth Biden. And the two BS in Congress, Reid and Pelosi. Then we got tax cheat Charlie Rangle and hot lips Barney Franks, the guy who started this mortgage mess along with his buddy Dodd.
Reply
4-16-2009 @ 11:20AM
barry said...
with all this bickering, i'm sure not one of you malcontents ever operated a retail store in a mall. that you never had to experience incompetent mall management and uncaring mall ownership. and are completely and intentionally oblivious to the historic growth of mall construction in light of a declining retail market with the advent of internet shopping and low cost low price merchandizers. instead you want to blame this on obama after 3 months in office? you believe it's reid and pelosi's fault? give me a break. the blame belongs on bad business and bad business practices. time to get your collective heads out of limbaugh's rear end.
4-16-2009 @ 2:16PM
red white & YOU said...
As we can all see, you are a member of the NO NO NO party. Where is Bobby Jindal when you need him? Nah i don't the he can cut it. Newt? nope. How about i can see Russia from my front porch Palin? You betcha thats another NO. Steele? Even YOU can't comment on that one. Ok Rush? ummmm sorry NO. So who is the GOP's answer??? Seems like the members of the NEW minority (republicans & rednecks) like to point fingers...Lets all go out and get some TEA now. Better make YOURS decafe
4-16-2009 @ 2:23PM
alouisis said...
Obama? How is Obama responsible? Everything that drove General to BK happend while GWB was pres. Where were you then?
4-16-2009 @ 3:28PM
dee said...
Nick either your an idiot or an idiot. President Obama is not at fault for this company filing chapter 11. He's only been in office since January 2009. I do believe it takes longer than four months for a corporation such as this to go belly up. Go sit down somewhere and STFU!
4-16-2009 @ 3:59PM
Jason said...
Seriously? You know nothing about economics or business management. As a devoted registered Independent, here is the explanation: Economists came out in February 2001 stating that if nothing was done, the economy would tank, citing that from 1996-2001, the economic outlook of the country was hinged on false markets (remember all those market bubbles/balloons that everybody was talking about from 2007-2008?). 1996 Republicans took over most of congress, and began deregulating and giving corporations such as ENRON what they wanted. 2002, Bush & Co screamed "SPEND!! The economy will tank if you don't spend your money" and suddenly banks were handing out loans left and right without doing research on the person/business requesting the funds. But wait, it gets better... From 2006-October 2008, economists as well as the democratic party were ranting saying that something needed to be done, but the republicans were steadily saying "Nothing is wrong, the markets are 'fundamentally sound!'", and many of them are so set in their ways that they refuse to see the current situation, and still say "the markets are fundamentally sound!". There were too many "NO" republicans who made it possible to block regulatory legislation that could have prevented much of this mess from happening to begin with. Don't believe it? Research my time line as well as the course of events that led up to the mess we're in now. You can't blame the current president for the markets going sour in October of 2008, which was prior to this president even being ELECTED. You idiot.
4-17-2009 @ 12:18AM
CB said...
Nick is right....Obama is certainly not helping anything right now...This might have all happened while GWB was in office, but look who held the senate...not the republicans.. The democrats would like to just blame it on the past...its all the republicans fault..Tell me how taxing business and "the people who spend the most money" is going to help our economy...just a thought
4-17-2009 @ 3:37PM
Lynn said...
Get a grip, Obama had NOTHING to do with this! If you honestly believe this TRIPE then you don't have a clue about how economics actually works! This has been an economic fiasco in the making since the 1980s when credit card cos. started giving it to anyone and everyone regardless of their "ability to pay"! The American citizens have been deluding themselves if they honestly believe they can "buy themselves happiness" by filling their lonely lives with STUFF and shiny new things! Both Congress (ALL OF THEM) and the American People are responsible for their BAD SPENDING HABITS and have turned this once prospering country into a DEBTOR NATION!!! Luckily, I'm not the type who can be "seduced" by spending today what I hope to make next month which is why we're in this mess! I learned in 7th grade, when they actually taught economices, to: "Live within your means, save for a rainy day, and invest in your retirement". It has worked very well for me as I have no debt, and am not suffering from any economic hardships---now if I get the rest of the country off the government and credit TIT, we might have a prospering country once again! UGH!
4-17-2009 @ 8:17AM
Steve said...
Interesting.....the man has been in office for LESS than four months and you've got the entire catastrophe blamed on Obama??? Sounds to me like you voted for the wrong party eh....and you can't get over it, right? LOL! I'll bet you wanted someone like McPain and Failin in office...yeah, that would have made the world a better place. I don't know about anybody else, but my PORTFOLIO is showing EXCELLENT signs of recovery...already! I appreciate that. Oh, one more thing, I would never blame ONE PERSON for the mess we've been in.....It's taken a WHOLE BUNCH OF GREEDY BASTARDS TO PUT US THERE!
4-16-2009 @ 8:59PM
Gail said...
Really? He's been in office for a few months and this is his fault? I'm not even a fan and I find that to be an ignorant point of view. Where have you been the last 4 years?
4-16-2009 @ 8:31PM
People R A Trip said...
So what did George W do for you if Obama is such a slime?
4-17-2009 @ 9:14AM
geordi said...
You're accusing Obama of being a slime ball and slinging his b.s. around? There's the pot calling the kettle black. This recession-depression was the work of eight years of inept and criminal Bush mismanagement of the country's affairs. Try not to let your racism and hate get in the way of learning the facts. Of course, facts are something republicans tend to ignore and deflect with their infantile name calling anyway. And really, you want to talk about a politician putting his foot in his mouth? Good God, Bush IS the all-time champ at that. You can also listen to Limbaugh, Hannity and O'Reilley doing the same thing every day, and I'm sure you waste your time doing so.
4-16-2009 @ 9:35PM
ed baggett said...
You're blaming the wrong source of the problem. He's now kicking back, drinking mint juleps, and building a library in Crawford Tx. he's the real devil, you seek. Don't pass the buck !!!!
4-17-2009 @ 7:13PM
Willie said...
Nick, you nazi skin head go back to germany, if you don't like it. Anyway twelve years of the Bushes mess this country up. If you don't under stand that, you brain dead fool.
4-16-2009 @ 10:26PM
Doc said...
You nailed it Nick
4-16-2009 @ 11:11PM
renee said...
lick your wounds and get over it, this mess was here before obama got in office, so he did not creat this mess and who ever think it can be fixed in a couple of months is as dumb as you are. he is the president whether you like it or not that don't change the facts, so scratch your fat a-- and get over it
4-16-2009 @ 11:11PM
Mark said...
oh, so who was the one that started all this mess??
George Bush, put blame where blame belongs.
4-17-2009 @ 12:48AM
Vicki said...
Surely you are going for effect -- no one could truly be that ignorant.
4-17-2009 @ 2:37AM
Ken said...
If you don't like it here in America then leave you stupid TEABAGGER
4-17-2009 @ 2:59AM
Mujo said...
Nick... please take your meds. You are a true idiot.