He says the issue the real estate industry faces is a paucity of credit. He adds that one section of the financial stability plan called the consumer and business lending initiative expands TALF to include CMBS.

Chandan says provisions in TALF will encourage lending, but don't meet the standard of sufficient condition to spark loan issuance. He says there are other regulatory and policy issues in the program that need to be addressed.

"Whether you are looking at the securitized market or the capacity of banks to lend, there is the potential for shortfall in the availability of credit, relative to the demand for credit, that results from required re-financings," says Chandan. "That, in balance, will ultimately drive delinquency and default rates."

Also in the FDIC statement was news that its insurance fund declined in Q4 by $16 billion or more importantly, its reserve ratio fell from 0.76% to 0.4% at year's end. When the reserve ratio falls below 1.15%, the agency is required to establish and implement a plan to restore the ratio. Usually, that money is raised by charging banks an insurance premium assessment, which is then used to fund FDIC resources. In response to the new low, the FDIC announced Thursday that it plans to double the fees it charges to banks in order to replenish the fund.

Looking back, the FDIC said as recently as March 2008 that its reserve ratio would be 1.32% in 2009. Banks too were optimistic, saying in a 2007 American Banking Association statement that the FDIC would see a 1.25% ratio "well before year-end 2008."

Despite the apparent lack of oversight by both parties, some, including Chandan, say this is no time to increase bank insurance premiums since the cost could impede lending, thus contributing to an even longer slowdown.

"On one hand, the deterioration in the deposit insurance fund, the depth, is certainly of concern," Chandan says. He adds that an increase in the premium charged by the FDIC that is tightly tied to the risky-ness of the underlying assets is certainly appropriate.

But Chandan cautions that steps to replenish the fund should not come at the expense of potential sound lending by financial institutions. "The FDIC should not seek to rebalance the fund in the short term in a way that further discourages sound lending practices," he says.

In the end, Chandan says that once things do stabilize and banks begin to see profits, there will probably be a new thinking about risk and insurance premiums and banks will pay more than they have in the past. "Part and parcel, there will be a regulatory regime that does not allow for the risky loans seen in this economic cycle."