Features

Sacramento at risk for overdevelopment

The Associated Press
Wednesday September 27, 2000

The Federal Deposit Insurance Corp. has added five cities – Denver; Fort Worth, Texas; Jacksonville, Fla.; Sacramento, Calif.; and Seattle – to its list of metropolitan areas identified as at risk of overbuilding of commercial properties. 

“Overbuilding is one of the yellow caution lights in the economy and the (banking) industry that we are watching closely, and it is a caution light that is flashing more brightly” than before, FDIC Chairwoman Donna Tanoue said Tuesday. 

Tanoue and other federal regulators are worried that banks are loosening their credit standards too much as they joust for market share, and that they could be unprepared for losses if the economy stalls. 

Problem loans by nationally chartered banks to U.S. businesses have more than doubled in two years, to $100 billion, according to a survey by a Treasury Department division released last week. 

The FDIC’s action Tuesday brought to 13 the number of cities deemed at risk of excessive building. The other eight are Atlanta; Charlotte, N.C.; Dallas; Las Vegas; Orlando, Fla.; Phoenix; Portland, Ore.; and Salt Lake City.