Congress worries about commercial real estate

I posted about the Congressional Oversight findings of the trouble of commercial real estate. Now Congress jumps on the bandwagon:

A bipartisan group of 79 House members led by Representative Paul E. Kanjorski, Democrat of Pennsylvania, and Representative Ken Calvert, Republican of California, sent a letter to the Treasury Department and the Federal Reserve on Monday urging them to take a more active role in keeping the commercial real estate market from turning into a disaster.

“The growing bubble in the commercial real estate industry has the potential to infect our economy and slow a recovery,” Mr. Kanjorski said in a statement.

“In order to safeguard the businesses operating on Main Street and protect the millions of jobs depending on commercial real estate, the Treasury and the Federal Reserve now must take needed and urgent action to stave off a potentially devastating wave of commercial real estate foreclosures and bank losses,” Mr. Kanjorski said.

The congressmen are calling for the agencies to make clear public statements encouraging lenders to continue to make credit available for performing assets, even if the value of the property has taken a hit in its value. More than $1.4 trillion in commercial mortgages will come due by 2013, and as much as 65 percent of those deals will have trouble getting refinanced because of the drop in property values, according to Deutsche Bank.

By encouraging lenders to refinance the deals, the lawmakers are hoping that commercial real estate values will stabilize. But that assumes commercial real estate owners will even want to refinance their properties. In many cases, the debt payments exceed the rent roll, making it uneconomical to hold on to the property.
Read on.

Go to Statement from Representatives Paul E. Kanjorski and Ken Calvert »

I highlighted Rep. Ken Calvert's name on purpose. And certainly this is a conflict of interest. Why? Because Calvert has commercial real estate holdings and the troubles in commerical real estate market will affect his wallet. CREW named Rep. Calvert as one of the most corrupt politicans.

Representative Ken Calvert (R-CA) is a nine-term member of Congress, representing California’s 44th congressional district. Rep. Calvert’s ethics issues stem from (1) his use of earmarks for personal gain; (2) his illegal land purchase; and, (3) his connections to a lobbying firm under investigation. Rep. Calvert was included in CREW’s 2006, 2007, and 2008 reports on congressional corruption.

Earmarking for Personal Financial Benefit

In 2005, Rep. Calvert and his real estate partner, Woodrow Harpole, Jr., paid $550,000 for a four acre piece of land at Martin Street and Seaton Avenue in Perris, just 4 miles south of the March Air Reserve Base in California. Less than a year after buying the land, without making any improvements to the parcel, they sold the property for $985,000, a 79% increase. During this period, Rep. Calvert pushed through an earmark to secure $8 million for an overhaul and expansion of a freeway interchange 16 miles from the property, as well as an additional $1.5 million for commercial development in the area around the airfield.

Read more on Calvert from the CREW. Click here.