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
South Beach played host to the 2018 CREFC January Conference last week, as roughly 1,800 of our best friends in the CRE lending and securitization industry assembled in Miami to reflect on another year gone by and to muse about what’s in store (or out of store, in the case of retail) for 2018. In keeping with tradition, Dechert’s reception at the SLS Hotel was a hotbed of schmoozing, deal talk and employment fair, as over 400 guests took a break from discussing the SEC to… watch the SEC. The excitement of the Alabama-Georgia national championship game was a welcomed excuse to extend the party well beyond the official ending time (a move that is quickly becoming an expected budget buster for this annual event).
As usual, Dechert was well represented at the conference. Dechert’s Laura Swihart served as conference co-chair, and Rick Jones moderated a riveting (ok, not so riveting) panel on “Floating Rate Loans: Circa 2018”.
Conference panelists and attendees were generally bullish, and why wouldn’t they be after a 2017 that saw $95.3 billion in U.S. CMBS issuance (not including the GSEs). For color, that number is up more than 25% from 2016. Not a bad way to usher in the risk retention era.
Continue Reading 2018 CREFC January Conference – Plateau or Status Quo?
This commentary is not customarily about politics, although those with a subtle cast of mind might get an inkling of some my personal views from my always dry and balanced language. However, right now, it’s hard not to think explicitly about politics and the new Trump administration.
Continue Reading Love (Financially Speaking) in the Time of Trump
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 of Law and the Arnold H. Leon Professor of Law, teaching securities laws. This is a great book and an important read. Paul argues cogently that:
Continue Reading Why Regulation Fails
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 and regulation.
Continue Reading A Trip Through the Labyrinth – The Regulatory Man in Full
The 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?
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 activities and acquiring or retaining “ownership interests” in (or acting as sponsors of) certain “covered funds.”
Continue Reading Volcker Rule – Five Years On
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. As we look over this complex web of transactions, deal structures, innovations, capital flows, business plans, business goals, failures and successes that is our market, things look pretty damn good.
Continue Reading A Mid-Year Report Card on the Commercial Real Estate Capital Markets
The Risk Retention Rule Is Coming! The sky may not be falling, but The Risk Retention Rule is Coming at last! Very soon, we hear.
Continue Reading Stand by for Risk Retention
A few steps forward and a giant leap back. This familiar phrase might be the perfect summary of the CLO market’s Volcker Rule roller coaster since December 2013. A few weeks ago we wrote about the Federal Reserve Board’s (the “Fed”) less than satisfying “fix” to address what the market has perceived as one of the Volcker Rule’s unintended consequences. The Fed, in what had seemed to be an honest (although insufficient) attempt to prevent the need for banks to divest of holdings in CLO 1.0 transactions, agreed to provide two 1-year Volcker Rule conformance extension periods. As extended, the conformance periods will expire in mid-2017.
Continue Reading Fed Issues Additional Guidance on Extended Conformance Period – Be Careful What You Ask For