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Informally known as Plan C, the internal project is focused on vexing problems such as the distressed commercial real estate markets, the high rate of delinquencies among homeowners, and the struggles of community and regional banks, said government sources familiar with the effort.
The creation of Plan C is a sign that the government has moved into a new phase of its response, acting preemptively rather than reacting to emerging crises, officials said.
"We are continually examining different scenarios going forward; that's just prudent planning," Treasury spokesman Andrew Williams said.
The officials in charge of Plan C -- named to allude to a last line of defense -- face a particular challenge in addressing the breakdown of commercial real estate lending.
Banks and other firms that provided such loans in the past have sharply curtailed lending.
That has left many developers and construction companies out in the cold. Over the next few years, these groups face a tidal wave of commercial real estate debt -- some estimates peg the total at more than $3 trillion -- that they will need to refinance. These loans were issued during this decade's construction boom with the mistaken expectation that they would be refinanced on the same generous terms after a few years.
The credit crisis changed all of that. Now few developers can find anyone to refinance their debt, endangering healthy and distressed properties.
Another issue identified by the Plan C team is homeowner delinquencies, which continue to rise as large numbers of people lose their jobs and miss monthly payments.
3 Trillion dollars more to clean up the mess. Taxpayers have a lot of things on our plate in the future.
I doubt that the 'rich' can take care of the problem.
Last edited by NEPatriot; 07-14-2009 at 04:58 PM..
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