Jamie and his denial will catch up with him...pretending JPM is immune because of CREATIVE book keeping will put this stock into the dirt...

In an Oct. 28 report that has attracted the attention of several government agencies, Parkus predicted that "many hundreds" of banks will fail due to their exposure to commercial real estate.

On Friday, billionaire Wilbur Ross lent his voice to those predicting a "huge crash in commercial real estate," Bloomberg reported. Fellow megainvestor George Soros predicted a "bloodletting."

Lenders are learning that many commercial property owners can't pay back loans -- or qualify for new ones. Delinquency rates on construction loans have already soared to 16% and could go much higher, notes Parkus.

And yet to this point, he adds, the banks have taken very little in charge-offs or reserves for commercial real estate losses.

"Less than 1% of commercial real estate loans have been written off. Our expectation is that losses will exceed 8%," Parkus told IBD.

And despite the 16% delinquency rate, banks have written off just 4% to 7% of construction loans, he estimates.

"It looks like most of the reckoning lies ahead," he said.

Rogers reasons that banks have lagged in taking charges because they haven't had to. Accounting rules now give them wide latitude in recognizing impaired loans.

"They have not been forced to mark to market," he noted.

The immediate source of trouble for borrowers is no mystery: Massive job cuts have slashed office occupancy and crimped consumer spending in retail outlets. By year-end, 2.5 million office jobs will have been lost, says Matt Anderson, partner with Foresight Analytics, a real estate research and forecasting firm in Oakland, Calif.

Suburban office vacancy rates across the U.S. will approach 20% by the end of the year, Anderson reports. Rents have fallen by 17%.

In Manhattan, notes Parkus, office rents have fallen by roughly 50% from their peak. He expects further declines.

Summing up the problem, Rogers said, "Commercial real estate properties are not generating enough cash flow to pay off mortgages."