As the Federal Reserve gears up for quantitative easing part two, a slow hidden bailout is occurring in the commercial real estate market. Commercial real estate is a giant industry making up over $3 trillion in outstanding loans in the U.S. Yet not much is being said about this in the press. Why? Because in a way, commercial real estate (CRE) is being funneled through various channels to bailout horrible banking loans but the process is convoluted on purpose. We already have examples of the Federal Reserve owning a shopping mall out in Oklahoma for example. The Fed has purchased incredible amounts of debt including CRE debt. Much of the focus has been on the Fed monetizing residential real estate debt and this is true. After all, they did buy over $1.25 trillion in residential mortgage backed securities.
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