Dire news from from the Congressional Oversight Panel, which announced a new report yesterday concluding that a surge of commercial real estate loan defaults will hit small banks hard.

Community banks, unlike the largest Wall Street banks, face the greatest risk of insolvency due to mounting commercial real estate loan losses. According to federal guidelines, 2,988 banks nationwide are classified as having a "CRE Concentration." None of these banks are among the 19 largest bank holding companies. Forecasts project that banks will suffer their worst losses well after the timeframe examined by the stress tests – an exercise conducted only on the nation’s 19 largest bank holding companies – and well after Treasury’s authority expires under the Troubled Asset Relief Program (TARP).