The recent commercial real estate bubble that is now so painfully deflating is actually the grandchild of an earlier commercial real estate bubble.
For much of the period following the Great Depression, banks and thrifts did not play a big role in financing commercial real estate transactions. They were restricted by law from making long-term commercial real estate loans, which were deemed to speculative. Most of the financing for commercial real estate projects came from independent entrepreneurs or groups of investors rather than bank loans. When banks were involved, they typically were only allowed to make a loan for the construction period. After that, a new lender--which was generally an insurance company--would "take out" the construction loan. Largely due to these legal restrictions, real estate loans made up less than 10 percent of the overall portfolio of banks.
But in the early 1980s, banks and thrifts began developing an earnings problem. Under Paul Volcker's war against inflation, interest rates climbed so high that banks started to lose depositors to money-market funds, which banks were prohibited from offering by the Depression era Glass-Steagall regualtions. At the same time, many smaller financial firms that were dependent on short term funding saw their costs of borrowing skyrocketing. Many, especially the savings and loan thrifts, founds themselves in deadly squeeze.
http://www.businessinsider.com/the-guide-to-the-commercial-real-estate-catastrophe-2009-11#before-there-was-a-bubble-we-had-a-bubble-1