Experts say commercial real estate could be the next source of an economic collapse. But not all in Washington think the federal government needs to intervene.
Many economists worry banks have loaned money to developers for property that is losing value.
These commercial loans generally refinance after five years. The problem today: property values could be lower than they were five years ago. And that means developers may not want to or be able to refinance.
Despite the looming threat, Senator Bob Corker says the government does not need to prop up commercial lending. Because when the government steps in, business owners don’t know whether to expect a bail out or more regulation.
“I think most people realize we’re not going to be doing anything – or at least I hope we’re not – as it relates to commercial real estate. This is something the private sector can work out themselves.”
Corker says he does expect the troubled commercial real estate industry to further stress the entire banking industry.