BIS working paper No 530
23 November 2015
Source: Bank for International Settlements
Adonis Antoniades, BIS
The primary driver of commercial bank failures during the Great Recession was exposure to the real estate sector, not aggregate funding strains. The main toxic” exposure was credit to non-household real estate borrowers, not traditional home mortgages or agency MBS. Private-label MBS contributed to the failure of large banks only. Failed banks skewed their portfolios towards product categories that performed poorly on aggregate. In addition, within each product category they held assets of lower quality than those held by survivor banks.