Elizabeth Warren, Chair of the Congressional Oversight panel over TARP, says that we have a serious problem with commercial real estate and it’s going to affect a significant number of banks.

I am afraid. I’m afraid because of what I see in the real economy. I’m afraid because I don’t see books that are clean – balance sheets that have been cleaned up. I’m afraid because in October of 2008 Secretary Paulson came to the American people and said the problem is toxic assets on the books of the banks, and they’re still there. I’m afraid because Secretary Paulson said there’s too much concentration in the banking industry and there’s even more concentration today than there was fifteen months ago…

We haven’t yet put our feet on solid ground and begun to rebuild an economy we can believe in.

This is not some random web site author or blogger with a confirmation bias talking about the possibility of doom and gloom.

This is the chairman of the panel that oversees the near trillion dollar TARP bailout program.

Believe the spin from mainstream pundits and analysts talking their books if you wish.

But this women is not lying to you.

In addition to the coming second wave of the residential real estate meltdown , one in five Americans out of work, and a contraction in across-the-board credit lending, we have commercial real estate exposure that involves some $1.4 trillion dollars. Elizabeth Warren’s warnings are clear:

A big enough wave of commercial mortgage defaults would trigger economic damage that would touch the lives of every American. Empty offices, empty hotels, and empty stores could lead directly to job losses. Banks that suffer losses or fear they might could grow even more reluctant to lend, which could make it even harder for you to get a loan.

The largest loan losses are projected for 2011 and beyond, but the stress tests conducted on big Wall Street banks last year examined their stability only through 2010.

Even more significantly, community banks tend to hold much greater concentrations of commercial real estate than big Wall Street banks, but comunity banks never underwent any stress tests at all.

In total, nearly 3000 community banks, that’s nearly 40% of all the banks in America, have what the regulators call concentrated commercial real estate holdings, which means they have a very high proportion of commercial mortgages on their books and are at particular risk of being overwhelmed.

Mrs. Warren sums up our economic situation very well. And if you’re paying attention, then you probably have a good idea where this is headed.

We hate to be negative, but our mission is to provide our readers with the truth. And the truth is, No Bailout Can Stop It.

Watch Elizabeth Warren discuss Commercial Real Estate in her COP’s February Report and an Interview with MPTV World: