It wasn't that long ago that I was warning the commercial real estate market in the United States looked likely to trigger a new mortgage crisis with a soaring delinquency rate and building owners struggling to finance the massive loans they took out when the market was booming.

What's even more alarming now is the directive from the Federal Deposit Insurance Corporation saying examiners can let banks off the hook for non-performing commercial real estate loans. The directive says: "Financial institutions that implement prudent CRE (commercial real estate) loan workout arrangements after performing a comprehensive review of a borrower’s financial condition will not be subject to criticism for engaging in these efforts even if the restructured loans have weaknesses that result in adverse credit classification."

So let's be clear what's it's saying. Even if the banks have non-performing loans, they will not be subject to any reclassification. It's an attempt to make out that the bad loans will actually have some value to the banks in the long run. They won't.

This is another attempt to pretend there is no problem and pull the wool over the eyes of investors.