News

No Commercial Real Estate Bailouts
U.S. Senator Marco Rubio (R-FL)
May 24, 2023
RealClear Politics

Many of us have seen evidence of the commercial real estate industry’s “if you build it, they will come” mindset firsthand – the large empty office buildings, unused business parks, and blank store fronts. Now, it has Wall Street spooked…. “I see a tsunami of loans coming due,” one CEO recently told CBS…. 

Vacant properties, the work-from-home revolution, rising crime in urban centers, the unaffordability of city housing – all of these factors and more should have made it obvious that commercial real estate was approaching a cliff. Instead,…[o]wners used an “extend and pretend” strategy to get to the next monthly payment or quarterly earnings report. The façade only came down with the failure of Silicon Valley Bank….

We have created an economy in which large-scale investors only realize they’ve gone wrong when it’s too late to turn back. This proved devastating to middle-, working-, and lower-income Americans in 2008, who suffered a historic economic downturn while those “too big to fail” were bailed out by Washington. Unfortunately, history may be repeating itself.

If the Biden administration protects investors from the consequences of their actions, as the Federal Reserve let slip it would do in March, it will essentially be transferring wealth – at a massive scale – from America’s working class to the very investors and laptop liberals responsible for this crisis. That would tear our social fabric to shreds and further expand our class divide.

As policymakers, our duty is to the common good, not the stock market. Whether we like it or not, our economy is in the midst of a massive transformation. There will be winners and losers, but bailing out commercial real estate investors isn’t in our national interest. In fact, it would be the definition of unjust.

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