Sunday, May 31, 2009

Commercial Real Estate Defaults Coming

Commercial real estate may soon bulldoze the green shoots.

A coming wave of defaults on loans to developers of condominiums, office buildings and malls could do significant damage to the already deflating economy. That was the overwhelming concern expressed at a public hearing of the Congressional Oversight Panel (COP) on Thursday that focused on corporate and commercial real estate lending.

The COP was set up last fall as part of legislation that gave the Treasury Department permission to spend $700 billion to rescue the nation's ailing financial system. The panel, which is headed by Harvard Law professor Elizabeth Warren, has no legislative or official regulatory powers. It is supposed to monitor the Treasury's spending and report back to Congress as to whether it is being effective in boosting lending and shoring up the financial sector. (more)

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