Property professionals have urged the US government to expand its efforts to fix the dysfunctional market for commercial building loans, arguing that the persistence of a credit crunch in this sector could lead to a further wave of losses for banks and derail any economic recovery.

Proposals have been sub mitted to the US Treasury for the creation of an insurance fund that would guarantee loans for office buildings, shopping malls and other commercial property investments.

'I am here today to continue to sound the alarm bell,' said Jeffrey Deboer, president of the Real Estate Roundtable, which represents developers, at a congressional hearing on the sector. 'The size of the [credit] problem is large today and, if not addressed, could become large enough to undermine the positive economic growth signs that are starting to appear.'

Financial Times