The Wall Street Journal Reported on March 13,”…The credit-ratings agency has a report out saying that sub-prime write-downs will total about $285 billion when all is said and done, putting the market “past the halfway mark,” as they title their report. ” Today Reuters reported, “The U.S. sub-prime housing crisis will not peak until 2009, rating agency Standard and Poor’s said on Tuesday, adding it had underestimated the extent of fraud in the industry.”

Today The New York Times reported that Senator Clinton gave a speech regarding the Sub-prime Crisis in which she stated, …”The housing crisis soon spread from sub-prime to traditional mortgages. And in August of last year, I warned the administration that the housing mortgage crisis would soon ripple out through the entire economy. ”

Clinton’s assertion is correct that the Sub-prime Crisis has spilled over into traditional mortgages and into whole economy.  The point being missed by Clinton and other pundits is however that there is another wave of bad news which might be coming.  This would be a crisis in commercial real estate valuations.  Ken Mannina with Senior Vice President with the SBA and Commercial Mortgage Banking Division of Bridge Bank wrote, “A slowing economy means that the feasibility of projects today is not what it was twelve months ago…the question about any project’s feasibility remains.”  Look at the example of the Manhattan developer (Harry Macklowe) who purchased seven office building in Manhattan for $6.8 billion in 2007.  According to CNN, “There was plenty of easy money available. Macklowe put up only $50 million of his own cash, financing the rest of the acquisition with $7 billion in loans, due in February, from Deutsche Bank and Fortress Investments…That’s a huge amount of short-term, high-risk debt. Once the sub-prime crisis unfolded, Macklowe couldn’t refinance. Now he is handing the keys to those buildings back to Deutsche Bank and other lenders to which the bank has sold some of the debt.”

Matt Hudgins with National Real Estate Investor wrote, “…the dollar amount of delinquent loans is increasing, and recent years of excess are contributing a growing portion to the delinquent pie. Total delinquent CMBS increased 19% to $2.279 billion in the fourth quarter from $1.915 billion in the third quarter, Standard & Poor’s found. Of that year-end amount, nearly half came from loans originated in the past three years.”

“2005, 2006, 2007 vintage years now comprise 45% of all delinquencies,” says Larry Kay, director of structured finance ratings at Standard & Poor’s. “These years were characterized by relaxed underwriting, high leverage and little loan amortization.”  Now the notion of relaxed underwriting, high leverage and little loan amortization sounds like the same verbage we heard when we discribe the Sub-prime Crisis.