Breaking The Code

I saw the movie Imitation Game last weekend, which is the story of Alan Turing and his role in breaking the Enigma Code which shortened World War II and saved millions of lives.  (Spoiler Alert:  He did it, we won.)  Turing, played by Benedict Cumberbatch, was terrific, even if you’re not a certified “Cumberbitch.”  It got me thinking that to actually navigate this economy, you have to be pretty good at code breaking.  There’s always a lot of code speak.  First, there’s the code of each of the hermetically sealed subcultures of business and markets (recent example on my desk is a note entitled:  Response to BCBS/IOSCO Consultation Document by GFMA, AFIRE, ASIFMA and SIFMA).  We will come back to this in a later commentary, but today let’s focus on officialdom when the often intentionally obscure or misleading Orwellian doublespeak of politics and policy achieve its higher expression.  Is it getting worse?  Well, it’s certainly not getting better.

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CREFC January Conference – Rolling into 2015

For those of us living in the northeastern U.S., last week’s Commercial Real Estate Finance Council (CREFC) January Conference could not have been better timed to escape the brutal cold for the tropical beaches of Miami.  We were joined at Miami Beach by a record number of attendees at this year’s conference.  The mood of the attendees was overwhelmingly positive, which translated into a number of lively sessions, and even livelier social gatherings.  2014 was a great year for the commercial real estate finance industry, and most industry insiders expect 2015 to be even better.  Our industry continues to grow like a rolling snowball, with no end in sight for 2015. Continue Reading

Schrodinger’s Cat

We here at CrunchedCredit are getting ready, as we do each year at this time, to polish up the palantir and make our predictions and business projections about the coming year.  While it can be a fun exercise, it’s actually serious business.  To start with, you need a macro view of the geopolitical situation, the markets and the economy.  To not start with a macro view is to make a choice, and a bad choice at that.  Continue Reading’s 5th Annual Golden Turkey Awards

This is our fifth annual Golden Turkey Awards at CrunchedCredit.  It just gets easier and easier. There are simply so many worthy contenders for an award this year.  You know, we don’t stop and take a moment often enough to just say thank you to our government and its enormous regulatory apparatus for being such a reliable source of material for us.  We read in awe at the breathtaking nonsense often emanating from our elected panjandrums and their regulatory cohorts and enabling self-appointed policy elites.  I’m so appreciative of the studied, surely serious, perhaps well meaning, ham handed and ultimately self-defeating efforts of our government to micromanage economic outcomes.  We here at CrunchedCredit spend a fair amount of time talking to the aforesaid.  The poverty of understanding about how financial markets work is really stunning.  You have to admire the willingness of our government, marinated in hubris, to weigh in, chest out and chin high on so many issues above their intellectual fighting weight.  So let me take this moment to just say thanks.

But, of course, what makes our life as card-carrying members of the commentariat good, makes the life of those trying to actually conduct business in this regulatory free fire zone excruciatingly difficult.  Our job is calling B.S., sussing out the inanity, stripping away the syntactic chaff behind or within which much regulatory product is hidden and trying to provide some helpful guidance about how to deal with this increasingly complex world along the way.  Not to diminish that getting our fiscal and monetary policy right is a deadly serious business, but we can’t help but find some humor in all this.

So, here it is – our Golden Turkey Awards for 2014.

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“First” Deeds of Trust now Second in Line?

Never a dull moment.  We at Crunched Credit are probably guilty of excess and perhaps myopic focus on our federal government and its regulatory apparatus; it is such a consistently reliable source of commentary and outrage.  So here’s one out of left field, but no less important for that.  Continue Reading

The Continuing European Banking Crisis and Hidden Capital Shortfalls

Who says that Europeans don’t get Halloween?  After more than a year in the making, the European Central Bank (“ECB”) just finished its most recent stress test and found that pretty much everything was kinda OK.  Sure, a few banks here and there in the nether regions flunked, but perhaps with the exception of that most wonderful Banca Monte dei Paschi di Siena, no one flunked that badly.
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Risk Retention and Stockholm Syndrome

After three years of waiting, we now have our Risk Retention Rule.  All six of the Agencies responsible for the Rule – the FDIC, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Department of Housing and Urban Development, the Federal Housing Finance Agency and the SEC – have finally managed to agree, albeit with significant dissent at the FDIC and the SEC, on a Final Rule.  Note that Richard Cordray of the Congregation for the Doctrine of the Faith (in Progressive Causes) …er…the Consumer Financial Protection Bureau, apparently had a heavy finger on the scales, which is why there was material dissent at the FDIC and SEC.  So, after all those years of waiting, we have “it.”  “It” of course is another five hundred some odd pages of commentary and bloviating and a relatively few pages of actual Rule which, as we study it more, will inevitably have left much that will need to be subsequently clarified.  We have already found technical inconsistencies between the commentary and the Rule.  Continue Reading

PACE Yourself

Property Assessed Clean Energy (PACE) loans allow property owners to finance clean energy improvements to their properties generally secured by property liens senior to mortgages through tax assessments.  Moody’s recently released a special comment expressing some concerns and not-so-subtle hints that it thinks that lenders and securitizers should take PACE programs seriously. Continue Reading

Securitization in the Sand – ABS East Turns Twenty

By: Daniel Wohlberg and Sean Solis

On Sunday, September 21st through Tuesday, September 23rd, almost 3,500 industry insiders descended upon Miami Beach for the 20th annual ABS East Conference at the acclaimed Fontainebleau Hotel. The enthusiasm and excitement was palpable considering the record setting year the market had so far, especially in the CLO space.  The general tenor was cautious optimism as many believe the roaring market would continue for the next few years, but saving a bit of hesitation for some of the regulatory pitfalls up ahead.  Most were comfortable, however, considering the market’s resilience in dealing with the recent implementation of the Volcker Rule.

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The Grand Illusion: A Strategy

Have you heard the following thought expressed recently in one way or the another, “I’m less worried about what new black swans might swim onto our screens and more worried that we will just wake up one day, peer out of our bunker of habituated indifferences to the drumbeat of troubling news and decide, suddenly, that things actually are terrible!”  Bad news seems to pile upon bad news in the larger world.  We are off the map of the known universe in terms of monetary and fiscal norms, and yet when the last worse headline comes across the ticker, and the newsreaders do their level best to create drama, the debt and equity markets seem to, well, yawn.  What happens if one day we wake up and all of a sudden all that which was benign yesterday is terrible today?  It’s like one of those sci-fi movies where the doughy earthlings encounter a race of beautiful, peaceful people and then, in a blink, see them as the multi-arm, walking crustaceans with eyes on stalks and a distinct preference for space hero tapas that they really are.  Continue Reading