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the fact you bought an item for more than it's worth isn't a hit on the bank. So I'm not sure I see the problem...

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Commercial real estate isn't like residential... typically you can only borrow for 3-7 years ... most often it is a interest only balloon ... the property owners (think of a mall) are not really ever interested in eventually owning the property ,, they just want low payments and bank the difference in cash flow from rents.

So what we are seeing here is that every policy from Obama is working to prolong the economic crisis ,, that bad loans are NOT being cleaned up on the residential side (because there are too many and the banks can't afford for real pricing on their assetts,, it'll shut them down) and now they are left hanging on the commercial side... The property owners and banks will renew and extend the existing leases/mortgages while pretending that the property isn't upside down.. Many properties are cash flow negative and have been for 1 or 2 years now... I see a government program (read OWNERSHIP) in the near future...