2018

We at Dechert had our annual business meeting last week in Miami (tough duty).  Nestled in the general atmospherics of bon ami and collegiality were sessions on collaboration and connectivity amongst the lawyers in our firm.  Apparently the data suggested that law firms make more money when the partners of the firm work together.  Flash.  The mathematical proof of the blindingly obvious perhaps, but just in case, we were stentoriously and with great seriousness told that these conclusions were based on rigorous and exhaustive academic research; research undoubtedly paid for by the American taxpayer, along with other studies of similar compelling import such as why Americans don’t like lice.

But the point here is (and I’m not for an instant suggesting that making money is not a valid point) that collaboration is now essential to getting anything done right because we have all become so damn specialized.

All professionals and business folks, including those of us in Big Law, are under enormous pressure to be intensely specialized yet issues are never so neatly defined by those specializations which all too often also mark the boundaries of our intellectual domains.
Continue Reading Life in the Silo

As we all marinate in the difficulties of Mr. Zuckerberg, who, at the end of the day, can certainly salve any wounds with a net worth measured in the tens of billions of dollars, I was struck by the continued drumbeat for “REGULATION.”  Now, perhaps I am ill equipped to discuss Facebook, not being a participant and therefore never having clicked through a lengthy agreement on privacy (or the lack thereof), but I have some thoughts.  I’ll largely leave the ethics of the privacy contretemps to others, but I was struck by the parallels between the current kerfuffle over Facebook and privacy and the Dodd-Frank mess, lo these ten years past.

Let’s start with this dictum:  Beware the politician bearing new and comprehensive regulatory gifts for the American people.
Continue Reading I Hear This Cries Out for Regulation!

Morningstar has published a proposed method for rating single-asset/single-borrower (SASB) transactions. The new approach is slated to replace the “U.S. CMBS Subordination Model” with respect to SASBs and other forms of CMBS securities with similar credit and diversity profiles, including large-loan transactions and rake certificates. Morningstar has issued a request for comments on the proposal. We plan to provide our thoughts, described below, before the April 20th deadline, and encourage you to do the same. But first, answers to what are sure to be your most burning questions:
Continue Reading Morningstar Requests Comments on Proposed Rating Methodology for SASB Deals

It’s day 2 of Mark Zuckerberg’s Congressional debut and I still have yet to catch a glimpse of him or his entourage. But – I have had the opportunity, with some fellow industry players, CREFC staff and members of the CREFC-HVCRE Working Group, to meet and speak with members of the House Financial Services Committee (Andy Barr and Trey Hollingsworth), Senate Banking Committee staff and regulators from the FDIC, OCC and the Fed. The topic on hand: not Facebook or Russia, but HVCRE and HVADC.
Continue Reading The Day I (Almost) Met Mark Zuckerberg

Geeking out, I just finished reading the second report from the Alternate Reference Rates Committee that was just published jointly by the Financial Stability Board (FSB) and the Financial Stability Oversight Council (FSOC) in cooperation with the Alternate Reference Rates Committee (ARRC).  Does that scream bureaucracy in full, or what?  The report runs 40 pages, awkwardly pats itself on the back (with a net back-patting surplus allocated amongst the Federal Reserve, the U.S. Department of the Treasury, the U.S. Commodities Future Trading Commission and the Office of Financial Research) for confirming that we need a LIBOR replacement and the Secured Overnight Funding Rate (SOFR) is way better than the Effective Federal Funds Rate (EFFR) or the Overnight Bank Funding Rate (OBFR).  Ergo SOFR is the ARRC’s preferred alternate rate upon the expiry of the spavined LIBOR.
Continue Reading More Fun with LIBOR

Come gather ‘round people wherever you roam because, with apologies to Bob Dylan, in the past year the blockchain and cryptocurrency waters have grown.   In less than a year these topics went from obscure lore to a multibillion dollar question on most everyone’s mind. From tokenized securities to decentralized ledgers to smart contracts, blockchain technology …

Will 2018 be the Year of Concentration across our market?  “The Urge to Merge” was the title of a January 2, 2007 Economist article.  It resonates today.  The cover photo was two camels copulating, which some of the Economist readers, surely a high-brow and sensitive bunch, apparently found offensive, as the picture is nowhere to be found on the internet.  They would not allow me to republish the pic.  A priggish fastidiousness that does not reflect well.

Seriously, 2018 could be the year of significant concentration across much of the CRE non-bank space, and perhaps some portions of the prudentially regulated bank space as well. 
Continue Reading The Urge to Merge

Last week IMN hosted an inaugural New Hotel and Development Conference in New York City.  The gathering of developers, hotel operators, brands and other hospitality service providers was very upbeat.  Many panelists indicated that they were more optimistic now than they had been six months ago.  They credited the state of the macro economy and stimulus provided by the recent tax reforms.
Continue Reading IMN 2018 New Hotel Development and Construction Conference

I don’t think risk retention is applicable to a direct issuance securitization.  Many single asset, single borrower (SASB) transactions can be structured to avoid the need to retain risk under the Dodd-Frank Act and the attendant Risk Retention Rule.  There.  I’ve said it.  Read on.
Continue Reading The Astonishingly Shrinking Risk Retention Rule – SASB Transactions Unshackled