The Wall Street Journal reminded us this month that it was ten years ago, August 9, 2007, that the first regulatory domino in The Great Recession fell as BNP Paribas froze a series of resi investment funds for lack of a functioning market to value the securities. One could quibble about whether The Great Recession could … Continue Reading
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 … Continue Reading
I’d like everyone to go out and buy a copy of Professor Paul Mahoney’s slender new book, Wasting a Crisis – Why Securities Regulation Fails. Paul is a brilliant guy. Until this spring, he was the dean of the University of Virginia School of Law where he is the David and Mary Harrison Distinguished Professor … Continue Reading
And now to return to our commentary a few weeks back about the stultifying impact of ill-thought through rules and regulations (at best) (Brexit has intervened). This is our Regulatory State which broadly attempted to pick winners and losers and modify market behavior, to get an engineered outcome by using the blunderbuss of proscriptive rules … Continue Reading
The slow start to 2016 did not dampen the enthusiasm at CREFC’s Annual Conference, held last week in New York City. The conference saw record attendance, with standing-room-only crowds at virtually every panel. As with the Industry Leaders Conference in January, the hot topics on people’s minds were risk retention (and the rest of the … Continue Reading
With apologies to George Dangerfield, who published The Strange Death of Liberal England in 1935 chronicling the collapse of the British Liberal Party prior to World War I, I’m borrowing his title for this commentary. Okay, bear with me. Regrettably, we may be witnessing something happening to our banking system which is somewhat reminiscent of … Continue Reading
We may be approaching a tipping point where the burden of the new federal regulatory state, purportedly designed to make our economy stronger by making the banking system safer, will begin to demonstrably become a cure that’s worse than the disease. To my eye, much of the new regulatory apparatus feels like political theatre designed … Continue Reading
MERSCORP, Inc. (“MERS”) has been under fire for years. We wrote about it a while back when residential mortgage borrowers challenged the ability of MERS to foreclose on mortgages it held on the theory that MERS, as a mere nominee to the lender, was not a real party in interest. More recently, local recording offices … Continue Reading
After years of delays, changes and significant debate, the Volcker Rule is now, largely, in full effect. Sold to a sometimes intellectually incurious Congress and the electorate as a central piece of legislation to limit systemic risks to the financial system, the Volcker Rule, among other things, prohibits “banking entities” from engaging in proprietary trading … Continue Reading
For want of a baker, a job was lost. For want of a job, the economy was lost. For want of an economy, the banking system collapsed. For want of a banking system – well, ultimately Grexit. Grexit, Grexit, Grexit, Grexit, Grexit, Grexit, (China), Grexit, Grexit. The Greeks will be fine, right? There is no … Continue Reading
Or perhaps Prometheus had it right in its original form. “Whom the Gods would destroy they first make mad.” Look at what we are doing to construction lending in the name of our seemingly endless safety and soundness crusade. Under the new regulatory capital rules, we have a new asset class; HVCRE or High Volatility … Continue Reading
You know, as an economist, I am a pretty good piano player. I struggle every morning, marinating in the news cycle, to try to understand what’s happened to the US economy and what its impact will be or might be upon the business of commercial real estate finance. We apparently are inching up on the … Continue Reading
In Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 575 U. S. ____ (2015), the Supreme Court clarified issuer liability under §11 of the Securities Act. Section 11 provides that issuers are liable for registration statements that contain “an untrue statement of a material fact or omit to state a material fact required … Continue Reading
A securitization community coming off of record issuances in 2014 has entered the new year with a mixture of nerves and optimism. An estimated 6,500 finance professionals and attorneys converged for the 2015 ABS Las Vegas conference. The new risk retention rules, and their impact on CLOs in particular, were on everyone’s lips – to … Continue Reading
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 … Continue Reading
With apologies to Jerome Kern and Oscar Hammerstein, and in the afterglow of a relatively amiable final AB Rule, we are reminded this week that our business remains hogtied to a regulatory establishment that can’t seem to stop regulating. When a member of the regulatory apparatchiki hears someone observe, “Well, if I don’t get out … Continue Reading
I’m getting pretty annoyed at the calumny heaped upon “complexity.” Everyone wants to “hit the ball down the middle of the fairway”; “keep it simple, stupid”; “Stick to the knitting…”; “Plain vanilla only, please.” Don’t do anything not in the precedent. Oh, please. Okay, I’ll admit I’m talking my book here, but this is an … Continue Reading
We at Crunched Credit have taken a bit of a pause of late. It is, of course, the dog days of summer. But it’s time to get back into the fray. Let’s start by noting the doldrums seem to have taken a pass. From where we sit, the markets seem to be in robust health. … Continue Reading
Moody’s published a piece the other week that analogized credit quality in the CRE capital markets to the boiling frog – that if you put a frog in cold water and slowly raise the temperature, it never jumps out until it, pardon the pun, croaks. Tad, please tell me you never actually tried that in … Continue Reading
The Financial Times reported on April 2 that the Eurozone Banks continue to load up on sovereign debt; generally, the debt of their respective host countries. A few days later, the Financial Times reported a bevy of talking heads crowing over the end of the EC financial crisis. And then on April 16, the European … Continue Reading
It’s still in the early days of 2014. I think it’s finally stopped snowing in the East, the sun has come out and the stock market is continuing to outperform the woe purveyors. Republicans and Democrats have gotten something done on the budget; lions have laid down with lambs; geopolitically, the world’s a mess but … Continue Reading
Jens Weidmann, president of Deutsche Bundesbank, recently wrote a terrific piece in the Financial Times, making the point that the Faustian bargain between European sovereigns, their national banks, the ECB and EU policymakers to encourage European banks to gorge on sovereign debt may be politically attractive in the short run while being fundamentally a horrible … Continue Reading
Here at Dechert, we have seen a slow but steady work stream over the past several years in assisting institutions in either buying or selling of pools of financial assets. Just recently, we advised Wells Fargo Bank in connection with its acquisition of a $4.5 billion performing pool of UK loans and the simultaneous financing … Continue Reading
