Financial Reform

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RRWe 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 to impress the financial illiterate. Random chest thumping for populist cred on the cynical assumption that the system is big enough and robust enough to tolerate all this tampering.   Of course, I could be wrong and our policy elites could really be doing all this fiddling from an honest embrace of a simplistic, jejune analysis of extremely complex systems which they largely do not understand. I’m not sure which explanation scares me more.
Continue Reading Risk Retention and the Regulatory State: What It Means to “The Folks” in 2016 and Beyond

The 2016 CRE Finance Council Industry Leaders Conference, held this week in Miami, was dominated by two topics– risk retention and liquidity. Almost all the forums, panels and presentations at the conference were overshadowed by the specter of risk retention and more general concerns about liquidity.  
Continue Reading CREFC Industry Leaders Conference 2016

globe - 01-16As we do each year at Crunched Credit, we take the end of a calendar year as an opportunity to stop and reflect on where we are, and what the next year might hold. Recognizing the certainty that a successful prediction is more a random event – a blind cat finding a dead mouse, than a product of wisdom and analytic prowess, it remains an important exercise.  It bears repeating that refusing to take a view is actually to make a choice, and a pretty silly one at that.  So as we at Dechert churn through our budgeting and planning process for 2016, we will make some assumptions about the economic environment and adjust our planning accordingly.  Let’s agree, we are going to be wrong about a lot of stuff – maybe everything – but that fact doesn’t excuse the critical need for having a macro view.
Continue Reading If Interesting and Prosperous is a Choice, I’ll Take Door Number Two: Perspectives on 2016

In an uninteresting turn of events last week, Congress has passed the Omnibus Bill, which contained a provision extending the EB-5 program until September 30, 2016, with no other changes to the program. As previously discussed, the last couple of months have been filled with substantial discussions and the introduction of potential legislation aimed at reforming the program, but at the end of the day, Congress has decided to “kick the can down the road” for another couple of months.
Continue Reading With Its End in Sight, EB-5 Survives!

capitalEarlier this year we discussed the uncertain future of the EB-5 Visa Program, one of the most successful inbound investment programs of recent years, as evidenced by the $5.2 billion dollars the program has generated in the past ten years alone. Although the EB-5 Visa Program was set to expire on September 30, 2015, Congress approved a temporary extension that allowed the program to continue through December 11, 2015. But notwithstanding the growing popularity and success of the program and the enthusiasm about it from US domestic developers and property owners, it has always engendered some concerns and criticism.  And so, here in early December, its future hangs in the balance. Supporters say the program should be renewed because it generates employment opportunities and funds domestic businesses that rely on these types of investments, but critics claim the program is poorly regulated and tainted by fraud and a certain odor of unseemliness. With the potential expiration of the program set to occur later this week, it is uncertain whether the program will lapse, become permanent, be temporarily extended “as is”, or extended with significant reformations.
Continue Reading The Death of EB-5 Has Been Greatly Exaggerated

Golden_turkey-01As is our tradition here at Crunched Credit, each year, about this time, we award our Golden Turkey Awards.  Once again, I must say that we are blessed, blessed with so many worthy candidates.  Our government, our courts, the regulatory estate both here and in Europe and around the world and the political class in general have once again vied with verve and imagination and breathtaking persistence to win a spot on our acclaimed list.  For those of you who we must disappoint, please accept our heartfelt apologies.  Yes, you screwed up and did stupid things breathtakingly well, just not as well as this year’s winners.
Continue Reading CrunchedCredit.com’s 6th Annual Golden Turkey Awards

The way the new Basel III High Volatility Commercial Real Estate Lending Rule (HVCRE) was crafted, and is being enforced, is insane. We’ve written about this before.  This is one of the purest examples of the regulatory apparatchik’s mule-headed refusal to look at data or engage with the banking establishment to develop thoughtful and effective rules. I think I saw a thoughtful and effective rule once.
Continue Reading HVCRE: Surrender Is Not An Option

iStock_000053495504_XXXLargeThe Great Equity Correction of 2015 that is now being enjoyed by all of us is a correction, and not the beginning, of the Great Bear Market of 2015 (from my lips to God’s ears). It reminds me of just how little we know about how all complex systems, like the global financial market (and don’t get me started on climate), function. Nonetheless, our Regulatory State behaves as if this was not true and as if wise governmental types can simply declaim new rules and regulations to get their very specifically-designed outcomes.
Continue Reading The Regulatory State: May We Have A Little Humility, Please?