Fed's Bernanke: Carefully Watching Commercial Real Estate Mkt

WASHINGTON (Dow Jones)--U.S. Federal Reserve Chairman Ben Bernanke said Tuesday the central bank is closely monitoring the commercial real estate market, given the difficulty borrowers are having to refinance those loans.

The commercial real estate market could suffer from the same foreclosure troubles that have inflicted the residential market, Bernanke told the House Financial Services Committee. He said borrowers are having trouble refinancing the loans either through banks or the securitization market.

Thus, the Fed is urging banks to help creditworthy borrowers refinance, while the central bank is trying to jumpstart the securitization market by accepting new and legacy commercial mortgage-backed bonds as collateral in its Term Asset-Backed Securities Loan Facility, or TALF.

"We hope to open up the mortgage-backed securities market, which is an important source of funding and finance for the CRE market," he said.

Ranking committee member Spencer Bachus, R-Ala. said the CRE market "may be the wild card" in the ongoing financial crisis, saying recent reports from banks that raised concerns about the market, Bachus said.