When introducing Adams' discussion, moderator Paul Fetscher, president of both Great American Brokerage and the CCIM chapter, pointed out that NY Community Banks sent back a $600-million TARP check from the Treasury Department late last year. Adams later explained why: in the view of his bank's senior management, the constraints that came with accepting the TARP money outweighed the benefits.

The TARP program and the other components of what panelist David Dubrow called Treasury's "four-legged approach" to the financial crisis came in for high-altitude examination at the outset of the CCIM event. Newest of the four components, the Public-Private Investment Program, seeks to address the issue of toxic assets, including CMBS, more directly than earlier iterations of the government's efforts. "Will it work? No one knows," said Dubrow, partner with Arent Fox.

However, Dubrow said "the depth of the crisis," which went far deeper than the savings-and-loan collapse of the late 1980s and early 1990s, made such sweeping government efforts necessary. One reason the stakes were higher in last fall's near-collapse of the financial system was what Dubrow called "the shadow banking system" of CMBS, which financed about 65% of the current real estate market but was barely a factor in the S&L crisis. Today, CMBS issuance has come to "pretty much a screeching halt," and needs to be resurrected in some form.

Securitized debt isn't new to commercial real estate, panelist Larry Longua pointed out: his grandfather had encountered it when he entered the industry prior to the 1929 stock market crash. Down cycles are old hat, as well, which the 40-year real estate veteran has seen and survived. "After you've seen a horror movie three times, by the third time it's not scary anymore," he quipped.

Nonetheless, Longua--who described himself as "the resident pessimist" at New York University's Schack Institute of Real Estate, where he directs the REIT Center--forecast what he called "the coming disaster" that could dwarf rising defaults in CMBS. He said the real epicenter won't be CMBS, but rather the real estate loans held by commercial lenders.

Part of the problem, Longua said, is that the traditional place for bank financing of commercial real estate is in transitional properties, but at present 50% of the outstanding loans are in stabilized, income-producing properties. "These loans sitting on the books of commercial banks have no place to go," he said. "The insurance companies won't buy them, and the CMBS market isn't going to do anything."

Fetscher differed with Longua on the magnitude of the problem, but pointed out that there will be serious fallout from "the five-year bullet" of loans maturing. The first large-scale example of this, he said, occurred with General Growth Properties' bankruptcy declaration last month, largely because of the $5.4 billion of debt it assumed in acquiring the Rouse Co. in 2004.