According to Financial Week, Citigroup and Barclays each have more than $20 billion worth of commercial mortgage-related investments, while Merrill Lynch is just a hair behind. With the economy tanking, we're sure to see a spike in commercial defaults, which will ripple through the securities food-chain, forcing more write-downs. The default rates for securities issued over the past few years could increase two-and-a-half times, from 0.6 percent last year to 1.5 percent  in 2009.

So banks are going to have to deal with this along with all their consumer-related exposures. We'll likely start seeing the write-off action starting fairly soon. This will not rival the residential mortgage-backed pyrotechnics, but it's coming at a really awful time.

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