Fed Prepares for Commercial Market Bailout

We haven’t heard much about the troubled commercial market but it looks like a bailout may be a possibility.

Last week, Federal Reserve Chair Ben Bernanke suggested at least $1 trillion in credit would be forthcoming in order to avoid a “looming crisis.” Analysts say that while delinquencies are few, office vacancy rates are nearing record levels. This leaves banks holding $1.72 trillion in outstanding commercial loans and many of them are on buildings that are nearly empty. In 2009, $300 billion of these loans are due to be refinanced by commercial banks, but the banks are reluctant to refinance because the properties are dropping in value.

Since both insurance companies and pension funds are heavily invested in commercial real estate, they, too, are at risk.
Source: NAR & Christian Science Monitor, Ron Scherer (03/09/2009)