Friday, December 08, 2006

Fed Worried About Commercial Real Estate Bubbling?

Perhaps the Fed got burned on the residential real estate bubble, so this time around, they're trying to stop the floodwaters before they run into the commercial real estate barn.

sandbag2
[Thanks to revbiro.hu for the photo.]

Here is a release from the Federal Reserve, the Office of the Comptroller of the Currency, and the FDIC giving guidance on commercial real estate lending concentration, which sounds timely inasmuch as the commercial real estate sector seems to have taken on all that global liquidity that the private real estate market couldn't force feed into its stomach anymore.

No one at the Fed seems overly concerned about the origin of all of this liquidity. Wonder why.

This reminds me of those occasions when the Mississippi floods over its banks. Everyone runs around with their slicks on, throwing sandbags in front of their doors and alongside the insufficient levies, in the vain hopes that the water will obey their symbolic gestures.

The only thing that will cure a flooding Mississippi is for whoever is in control to turn off the rain.

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