A third of small landlord operations are prepared to cut rents by 10 percent to prevent vacancy, survey shows.

I'm back on the foreclosure bandwagon again, especially after getting the Treasury's Home Affordable Modification Program status report this morning, and its glaring omission of any information as to how many borrowers are actually keeping up with the payments on their trial modifications.

From Atlanta Fed President Dennis Lockhart: [H]ow serious is the CRE problem for the financial system and the broad economy? First, let me provide some overview comments: While the CRE problem is serious for parts of the banking industry, I don't believe it poses a broad risk to the financial system. Compared with residential real estate, the size of the CRE debt market is smaller, and the exposure is more concentrated in smaller banks. However, I am concerned about the potential impact of CRE on the broader economy. Unlike residential real estate, there is not the same direct linkage from CRE to household wealth—and therefore consumption—caused by erosion of home equity. However, there could be an impact resulting from small banks' impaired ability to support the small business sector—a sector I expect will be critically important to job creation . To add some detail: At the end of June 2009 there was approximately $3.5 trillion of outstanding debt associated with CRE. This figure compares with about $11 trillion of residential debt outstanding. About 40 percent of the CRE debt is held on commercial bank balance sheets in the form of whole loans. A lot of the CRE exposure is concentrated at smaller institutions (banks with total assets under $10 billion). These smaller banks account for only 20 percent of total commercial banking assets in the United States but carry almost half of total CRE loans (based on Bank Call Report data). Many small businesses rely on these smaller banks for credit. Small banks account for almost half of all small business loans (loans under $1 million). Moreover, small firms' reliance on banks with heavy CRE exposure is substantial . Banks with the highest CRE exposure (CRE loan books that are more than three times their tier 1 capital) account for almost 40 percent of all small business loans . To repeat my current assessment, while the CRE problem is very worrisome for parts of the banking industry, I don't see it posing...

Governments should consider the potential of financial institutions to severely damage global financial and economic stability in assessing when firms are "too complex to fail," the IMF said, launching a paper to help determine which firms and markets are systemically important.

Impending Foreclosures, Homebuyer Tax Credits Likely to Affect Real Estate This Winter:

ATLANTA, Georgia (Reuters) - The U.S. economic recovery is under way and policymakers should now focus on ensuring it is a durable one, a top Federal Reserve official said on Tuesday.

In advance of last weekend’s meeting of finance ministers and central bankers from the Group of 20, the International Money Fund staff to guide exit strategies to “pave the way for strong, sustained and balanced economic growth” that it recommends. Among the ingredients: Don’t rush to exit. Do be clear about plans to reduce government debt over time. Central banks can raise interest rates before they unwind unconventional monetary policies. Coordination among countries — although not synchronization — is important. The principles: Principle 1. The timing of exits should depend on the state of the economy and the financial system, and should err on the side of further supporting demand and financial repair. Principle 2. With some exceptions, fiscal consolidation should be a top policy priority. Monetary policy can adjust more flexibly when normalization is needed. Principle 3. Fiscal exit strategies should be transparent, comprehensive, and communicated clearly now, with the goal of lowering public debt to prudent levels within a clearly-specified timeframe. Principle 4. Stronger primary balances should be the key driving force of fiscal adjustment, beginning with actions to ensure that crisis-related fiscal stimulus measures remain temporary. Principle 5. Unconventional monetary policy does not necessarily have to be unwound before conventional monetary policy is tightened. Principle 6. Economic conditions, the stability of financial markets, and market-based mechanisms should determine when and how financial policy support is removed. Principle 7. Making exit policies consistent will improve outcomes for all countries. Coordination does not necessarily imply synchronization, but lack of policy coordination could create adverse spillovers.

Senator Christopher Dodd will propose creating a single U.S. regulator that would strip the Federal Reserve and Federal Deposit Insurance Corp. of bank- supervision authority, said a person familiar with the matter.