2018

In 2013, the Obama administration issued the Cole Memorandum, which called a truce between federal prosecutors and marijuana businesses operating legitimately under state law.  After regime change in Washington, however, it may come as no surprise that Jeff Sessions—the Attorney General who once opined that “good people don’t smoke marijuana”—rescinded the Obama-era guidance.  The only real surprise is that it took him a whole year to do it.

Since at least 2013, marijuana-related businesses have generally been operating on predictable, albeit legally shaky, ground.  Dispensaries have expanded dramatically.  Though details vary wildly, nine states currently allow recreational use and medicinal use is currently permitted under the laws of all but four states.

As a result, commercial real estate lenders have to grapple with the increasingly common problem of the dispensary tenant, and a number of lenders are dipping their toes into lending in expectation of securitizing loans secured in part by dispensaries.  But given the January 2018 announcement that the Cole memo is no longer in effect, the question everyone’s asking is: are things really that different?  The answer, we think, is no—but with an asterisk.
Continue Reading Securitizing Marijuana Dispensary Properties in the Sessions Era

The shear complexity of the modern world makes fools of us all.

It’s no wonder that conspiracy theories, just plain weird ideas and deeply counterfactual views abound these days. We don’t like to be bewildered or shocked by unexplainable events, and, regrettably we confront plenty of these every day. Confronted with the inexplicable, it is…

iStock / gremlin

LIBOR is going away, but that’s sort of old news at this point.  However, it has been received wisdom that only after the Bank of England stops imposing an obligation upon member banks to publish LIBOR quotes as at the beginning of 2021, would LIBOR go away…

You can never go wrong starting off a commentary with a butchered bit from the Bard, right?  “Now is the winter of our discontent” spake Richard III, an unamiable leader perhaps reminding us all today of our unamiable governing class.  Old Gloucester rhymed to presage war and chaos.  Apparently, all that happened because the poor dear couldn’t buy himself a date.  But hey, chaos, war, desolation, burning and pillaging, etc., aren’t all bad, that is, if you are equipped to enjoy the carnage.

And now, back to the market.  What am I rambling on about?  Distressed debt opportunities are coming back.  This is the silver lining, at least for some, in the cracks beginning to develop in our long, Goldilocks credit cycle.  A slowdown is not here yet, to be sure, but it’s time to sharpen the knives and begin to think about our opportunities. 
Continue Reading The Winter of Our Discontent May Be Over (If you are a Distressed Debt Investor)

We published the below commentary, In Defense of Securitization, last week and we are republishing it today as, let’s face it, we’re all getting very French, and many of us took most of last week off.  Enjoy, if that’s the right word.

Returning to the theme of my most recent commentary entitled God Hates Securitization, I want to elaborate on the point I made there (yes, if you stuck with me all the way through to the end, there was a point):  We need to fight the narrative that banking, finance and securitization are evil.  I am afraid that if we don’t do something here soon, we’ll wake up one morning (probably after the next cyclical downturn is underway) and find pitchfork-wielding villagers outside the gates thinking they have found Dr. Frankenstein’s monster.  Populist anger, whipped up by our critics demonizing the financial sector, unfettered from the necessity to defend these positions in the marketplace of ideas and the court of public opinion, is powerful.  That, coupled with our recent embrace of the weaponization of policy disputes enforced by both civil and criminal legal proceeding, should frighten all of us who make our living in the financial sector.  And, to be clear, it should frighten everyone who understands the importance of an efficient and liquid capital market for the continued success of the US economy.
Continue Reading Repost: In Defense of Securitization – Unto the Breach or Close the Wall Up with Our Dead (with Apologies to Mr. Shakespeare)

Returning to the theme of my most recent commentary entitled God Hates Securitization, I want to elaborate on the point I made there (yes, if you stuck with me all the way through to the end, there was a point):  We need to fight the narrative that banking, finance and securitization are evil.  I am afraid that if we don’t do something here soon, we’ll wake up one morning (probably after the next cyclical downturn is underway) and find pitchfork-wielding villagers outside the gates thinking they have found Dr. Frankenstein’s monster.  Populist anger, whipped up by our critics demonizing the financial sector, unfettered from the necessity to defend these positions in the marketplace of ideas and the court of public opinion, is powerful.  That, coupled with our recent embrace of the weaponization of policy disputes enforced by both civil and criminal legal proceeding, should frighten all of us who make our living in the financial sector.  And, to be clear, it should frighten everyone who understands the importance of an efficient and liquid capital market for the continued success of the US economy.
Continue Reading In Defense of Securitization – Unto the Breach or Close the Wall Up with Our Dead (with Apologies to Mr. Shakespeare)

Last week, the CREFC Annual Conference was back in its traditional New York venue, which benefitted not only the Manhattan hospitality market’s RevPAR but also provided for an exciting and lively location in Times Square.  Dechert’s bash on Monday evening was extremely well attended and the guests were treated to passed hors d’oeuvres and the…

The Wall Street Journal recently reported that the Papacy has denounced securitization characterizing it (in such an intellectually balanced way) as tainted by “predatory and speculative tendencies.”

Good Lord!

Now, I’m not perfect — I can’t remember the last time I participated in a black mass, inverted a crucifix or committed any of the more striking of your basic mortal sins — but I did close a securitization last week and now I’m worried.
Continue Reading God Hates Securitization?

When House Speaker Paul Ryan announced earlier this month that the House would vote on S.2155, I wasn’t holding my breath (you know you’re on your last lame duck leg when a “senior GOP lawmaker” says you’ve “run out of juice”).

Miracles do happen AND sometimes I love to be wrong (but – shh…don’t tell my husband): In the spirit of deal making, the House just passed S. 2155 (the Economic Growth, Regulatory Relief, and Consumer Protection Act) with bipartisan support (Yup – the Dems and the Republicans did this in both the House and the Senate…maybe there is more to come!). The President still needs to sign the bill before it becomes law, which everyone expects will happen soon.
Continue Reading “Pop the Champagne but Don’t Get Too Drunk”: HVCRE Reform Passes the House

In seven short years, the Consumer Financial Protection Bureau (CFPB) has managed to court controversy across the political spectrum.  Under the leadership of former Director Richard Cordray, the bureau (for better or worse) tested the limits of its jurisdiction and enforcement power in a wide range of areas, including the Home Mortgage Disclosure Act and Equal Credit Opportunity Act, student loan servicing, and let’s not forget the since-disavowed arbitration rule.  Enter new Acting Director Mick Mulvaney, who, along with the rest of the Trump administration, is sending the clearest of signals that he does not intend to “push the envelope” at the CFPB.  In short, the CFPB’s mission has turned inward—instead of policing the markets, it’s policing itself and the regulatory state, and with about the same degree of fervor.
Continue Reading D.C. Circuit to CFPB: “Go forth and conquer!” CFPB Responds: “No thanks.”