What will Geithner and company do about the rising risks in commercial real estate?

They've seen what is probably the largest default yet in commercial real estate - Stuyvesant Town. While it's unlikely that we'll see any larger defaults, it is virtually certain that we'll see many defaults on commercial real estate. The Congressional Oversight Panel thinks that about half of the loans up for renewal in the next five years are underwater today. That represents $700 billion, which is not exactly small change, particularly when many of these loans are not held by Geithner's friends, the "too-big-to-fail" banks, but by much smaller banks, the ones our government has not paid much attention to except when they fail. Will they start paying attention?

The panel concludes:

"The Panel is concerned that until Treasury and bank supervisors take coordinated action to address forthrightly and transparently the state of the commercial real estate markets – and the potential impact that a breakdown in those markets could have on local communities, small businesses, and individuals – the financial crisis will not end."