First, the ARRC, playing Charlton Heston, playing Moses, brings down from on high the ten commandments of SOFR and lo, we were sore afraid and with veneration, professed we had no God but SOFR. A solution of sorts to a somewhat self-inflicted problem. As we have observed before, we continue to think the solution to the problem of bankers diddling LIBOR is to punish bankers and shore up the system to make it more robust and not to blow up trillions of dollars of transactions and 40 years of precedent. But that train has left the station.
Last week, over 4,200 of our closest friends met virtually for the annual January conference by the Commercial Real Estate Finance Council, which is usually held in Miami. While we have all learned to go without in the last year, going without seeing the “smart resort wear” of our colleagues was almost too much to bear. Thankfully, CREFC put together an informative and interactive conference – complete with a virtual lobby that played in between sessions featuring a guy on his cell phone walking in circles. Talk about realistic! Best of all, CREFC honored the real reason we attend conferences and provided a “virtual swag bag.” All in all, CREFC did the best they could under the circumstances and we agree that’s all we ask of anyone or thing at this point. Continue Reading
The New Year is already proving to be a busy one. A new Congress, new COVID-19 strains and vaccine promises, and a new stimulus package making its way to American citizens and businesses. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 was signed into law just before the New Year. And while the $600 checks being sent directly to the American people and the extension of additional unemployment benefits seems to have captured the national attention, the $900 billion relief package will provide support to much more than the personal pocketbook.
Happy Inauguration Day (I hope).
Every turning of the year makes for a convenient point to look backwards, and of course, forward, but this year seems to actually denote some sort of inflection point and, as a card-carrying member of the blogosphere, I feel compelled to burden you with my views as to what the next year will hold for us all. I am unburdened by anxiety or discomfiture in doing so, as the prediction business is one of asymmetrical risk and reward. An anodyne exercise, I trust. No one actually expects talking heads to be right, and no one remembers when you’re wrong; but in the blind cat finding a dead mouse type of way, if you are right, you get to annoyingly trumpet your breathtakingly erudite and accurate prediction over and over again for the rest of the year.
After predicting a terrific 2020 last January, how wrong could I be this time? Continue Reading
My, my, my! Another governmental red line looks to be breached; at least this time no one gets hurt. We, at CrunchedCredit, have in some sense been carrying the government’s water about LIBOR transitions. We have been talking about how to prepare for transition, how to move current loan production onto a sound non-LIBOR basis and how to address legacy assets. In other words, we had taken seriously the warnings of the FCA and the Fed, as well as others upon the regulatory heights who assured us that the LIBOR transition would arrive in early 2022. While we had heard stray musings from the regulatory establishment throughout, we all took on board the assurances from the regulatory doyens and rebroadcast their message, that everyone’s “central assumption” should be that they “cannot rely on LIBOR being published after the end of 2021.”
I gotta tell you, I feel a little bit like Charlie Brown with the government playing Lucy.
We’re happy to share some exciting news as Crunched Credit’s very own Rick Jones has been named as a newly elected member of the Mortgage Bankers Association’s Commercial Real Estate/Multifamily Finance Board of Governors (COMBOG). COMBOG drives Mortgage Bankers Association’s commercial and multifamily policies and recommends industry standards. After a tumultuous year and with some uncertainty heading into 2021, Rick’s experience with and insight into the commercial real estate world will undoubtedly be an asset for COMBOG.
If you’d like to learn more about COMBOG and meet the other Board Members, read their press release here.
So, once again, time for Dechert’s acclaimed (at least by us) Annual Golden Turkey Awards. It is rather a difficult time for comedy; we are in the throes of a completely unfunny pandemic. Sitting down to finalize this year’s list gave me some sympathy for our late-night talk show hosts who are very publicly pining over the end of the Trump administration and trying to find humor in the anticipated Biden administration, where the watchword is “dull is cool.” But perhaps looking for inanity and making gentle fun of it might even be more important in tough times than good. So, with that in mind, we went digging for gems in 2020. Nothing seems quite so risible as in past years, but here’s the best of a bad lot:
Timing is everything. I published a piece two weeks ago on LIBOR transition to SOFR and suggested that folks get on with it and embrace this flawed but seemingly inevitable new SOFR index. Writing that piece, I thought of as rather an exercise in self-care, I just had to get beyond my annoyance with SOFR and stop worrying about SOFR and embrace it with all its flaws and join the SOFR chorus. Continue Reading
Since nothing is happening in the news right now, we thought we would put out a second post on LIBOR this week. As you may know, Dechert has a LIBOR podcast which you can find on our YouTube page. In the latest episode, David Bowman, Senior Associate Director from the Board of Governors of the Federal Reserve, joined Matt Hays and Jon Gaynor for a conversation about the transition. The discussion covered development of Term SOFR, fragmentation of SOFR-based rate fallbacks, tough legacy, the status of the New York State legislative solution (although this part is slightly outdated since a bill has been introduced), the proposed federal law solution and the fundamental human condition (that’s only partly a joke).
I wrote back in the early days of 2020, or as we call it now, the “Time Before,” that we thought it made sense for key market participants to consider an early move to SOFR pricing, not just as the backstop but as the interest rate of the loans. Frankly, we were thinking about the SASB market, and we thought that would be indeed well received by the investor community. Continue Reading