No federal bailouts for commercial real estate developers

THE latest request for bailout money from the federal government is from commercial real-estate developers. Somewhere the bailouts have to stop, and let it be here.

It was necessary in the September crisis for the Treasury to help the banks. Panic had created a domino effect. The international banking system threatened to fall as a whole, which would be unthinkable. For 75 years, the federal government has insured deposits in commercial banks, largely to forestall such an event.

Investment banks weren't insured, but they were part of the domino effect. Then came the money-market funds, which everyone knew were not insured, but had much of the people's savings. Add Fannie Mae and Freddie Mac, which were sort of like investment banks and very, very big, and also AIG, a financial company of a different kind.

Everyone had a hard-luck story, and of some merit. General Motors and Chrysler were not fibbing about their hurt, though their failure would create no domino effect. Congress didn't buy their story but President Bush did, and somehow that seemed to be enough.

Now the developers. Their story is that half a trillion dollars in commercial mortgages are going to come due in the next three years, and that they can't get any money out of the banks to refinance them. So they ask the Treasury.

It would be far better if they camped instead on the doorsteps of the banks. Banks have been recapitalized. They will roll over the good loans. They don't want to manage half a trillion dollars in office buildings and strip malls.

President Bush should say "no" to the developers' request and President-elect Obama should back him up. The Treasury cannot put balm on everything that hurts, and it needs to draw the line well short of commercial real-estate projects.