Hey Guys, Let’s Sue a Financial Institution! Our Government at Play

This is all about the difficulty of taking the punch bowl away from a roaring good party. Over the past several weeks a number of major banks folded under enormous pressure from the US DOJ to settle fraud claims resulting from the sale of bonds prior to the financial crisis of 2008. The allegations here were that, as they have been in many many cases over the past several years, the banks knowingly sold bonds backed by crappy residential mortgage loans. Apparently, no one else had a clue that this stuff was crap! Who knew? These last suite of deals were relative bargains for the banks because, reportedly, the DOJ was highly motivated to get these deals done before Mr. Trump took the helm at the White House.

For some reason this calmed investors’ concerns.

I don’t get it. Continue Reading

2017 CREFC January Conference – Primed for a Comeback

The 2017 CREFC January Conference, which took place last week at the Loews Miami Beach Hotel, provided an opportunity for those in the commercial real estate finance industry to reflect on an eventful 2016, and look ahead to 2017.  Although attendance was down by almost 11% this year (we’ll blame Zika), around 1,600 people attended this year’s conference.  The mood of the conference was generally upbeat, with most attendees expressing cautious optimism for 2017.  As usual, the parties were lively, and 435 people attended Dechert’s reception at the SLS Hotel on Monday night to indulge in sushi surfboards and the national championship game.

While the panels, meetings and forums provided an opportunity to take the pulse of the industry, and we will get to 2017 and beyond shortly, we need to pause for a moment and look back at a year which may be an inflection point in our industry, our country, and possibly the world.

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All You Villainous Bankers: Time to Take Off Those Black Hats

Standing on the beach and gazing at the exotic and unmapped shores of Trumpania (the land remade by the orange swan on November 9th), I am struck by the discontinuity of having watched our government and chattering class looking at our banking sector exclusively through the lens of risk and distrust these past 8 years only now discovering that it might make sense to look at the banking sector through the lens of growth. Headline News! The banking sector is a critical component of a growing healthy economy! Who would have thought! The signs are already there that the focus of the government will be significantly less on bolstering prudential regulation and materially more on empowering the banks to provide liquidity needed for the economy to reach that magic 4% place that Mr. Trump has told us that we will achieve. Continue Reading

CrunchedCredit.com’s 7th Annual Golden Turkey Awards

As is our tradition here at Crunched Credit, each year, about this time, we present our Golden Turkey Awards. In a year of monumentally bad surprises, we truly had difficulty narrowing our list down to only the exceptionally worthy candidates. Voters, governments and regulators sent shockwaves throughout the world in 2016, upending markets and throwing much of what we thought we knew into the proverbial dumpster fire of society. If what we know now we knew when we last gave the Golden Turkey Awards, we may have taken a pass on 2016. It can’t get any worse, right? As we get ready to step into the unknown of 2017, here is our list for 2016: Continue Reading

Love (Financially Speaking) in the Time of Trump

This commentary is not customarily about politics, although those with a subtle cast of mind might get an inkling of some my personal views from my always dry and balanced language.  However, right now, it’s hard not to think explicitly about politics and the new Trump administration.

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Risk Retention and the CRE CLO

As we are just inking one of the very first pre-risk retention effective date risk retention deals (Potemkin Village anyone?), we are also seeing an increased flow of what are generically referred to as CRE CLOs. It’s time to consider how the Risk Retention Rule (the “Rule”) will apply to this growing market technology. Continue Reading

CFPB Held to Have an Unconstitutional Structure

We have previously written about some of the overreaches by the Consumer Financial Protection Bureau (CFPB).  Last week, the D.C. Circuit Court of Appeals held in PHH Corporation v. CFPB that the structure of the CFPB is unconstitutional.  Taking issue with the fact that the CFPB was headed by a single director removable by the President only “for cause”, the court fashioned a narow remedy by striking the director’s “for cause” removal protection.  The court also held that the CFPB’s retroactive application of a new interpretation to years-settled law was an affront to the Due Process Clause and remanded the case for further considerations in light of this holding.  For more information on this case, please read our recent OnPoint.

Seeing is Believing: ALTA’s New Survey Standards

orange theodolite prism lies on a background of geodetic maps of the areaFor those of you who read our commentary regularly, you’ll see that we span the commentariat world from musings of perhaps little practical utility but great import (at least to us) to the more mundane.  Today, mundane. Let’s talk title policies and survey standards.  There’s good news here and often good news doesn’t travel fast enough, so here we go.

Title policies “insure over” information that a survey would discern.  It’s precious little good to have a title policy yet find out there’s a missile silo just behind the setback line owned by the US Government.  So title companies require a survey and will generally insure over any nasty surprises the survey would have uncovered. Continue Reading

Zika Keeps Investors Away From ABS East, But Not From CLOs

Although registration was up this year for IMN’s 22nd Annual ABS East conference held at the Fontainebleau Miami Beach earlier this month, attendance was lower than it’s been in previous years as many industry participants decided against attending due to concerns about the recent Zika outbreak in Miami. The CLO sector, however, continued to be well represented and the consensus of the conference attendees was that CLOs have a very positive future ahead. Continue Reading

A Report From the Risk Retention Front-Lines

Your correspondent is fresh from the front-lines of the risk retention wars where great armies of lawyers, bankers and advisers are fixedly staring at each other, staring out of the redoubts of their respective defensive crouches in a complex, multidimensional chess game.  All are fervently hoping against hope that something or someone does something to create clarity and allow our business to pivot around this new set of rules so it can continue to thrive.  I think all of us in the finance world are justifiably proud of the fact that if we are given a set of rules, we’ll figure out how to conduct business.  But the uncertainty here is freezing everyone in place, a giant front court pick that we can’t seem to get around.  But one thing is certain and that is that Christmas Eve is coming and with it this Rule will become effective.  After having obsessed about the Risk Retention Rule for years now, we are broadly no closer to clarity about how one should play in the soon to be upon us risk retention world.

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