The Congressional Oversight Panel's Dour Take on Commercial Real Estate

Here's a 189-page document from the Congressional Oversight Panel on Commercial Real Estate Losses and the Risk to Financial Stability. FT Alphaville has an excellent post summarizing the report that includes some illustrative charts. Check that out or read the full report for yourself below.

The panel is very worried about the financial system's ability to absorb coming commercial real estate losses. The worries are not so much about this year as about 2011 and beyond. The government has already done a great deal in attempts to backstop the financial system against losses in commercial real estate portfolios. We have TALF and PPIP. Mark-to-market accounting rules have also been relaxed. There are rumblings that the CMBS market is slowly reviving with the first multi-borrower CMBS in two years in the works. Will the commercial real estate financing machine be mended enough in 2011 and beyond to deal with coming expirations? Or is more government action necessary to deal with the losses the report foresees?

Cop 021110 Report

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