Commercial Real Estate Finance

Posts Tagged ‘too big to fail’

KC Fed President Tom Hoenig

Yesterday, Kansas City Federal Reserve President Thomas Hoenig spoke at a field hearing of the House Subcommittee on Oversight and Investigations.  Read Bloomberg BusinessWeek’s report on his testimony here.  In answering lawmakers’ questions, Hoenig offered his take on the recovery of the U.S. economy.  The most salient bit of Hoenig’s testimony, and the bit that many reporters latched-on to, was his suggestion that community banks have been placed at a disadvantage in competing with the behemoth banks like Citibank (NYSE: C) and Bank of America (NYSE: BAC).  According to Hoenig, many community banks have thus far proven strong enough to stand up to the tests posed by a struggling economy.  If they are to make it through this recovery, however, they will need to be given an equal chance as large banks to succeed.

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This Valentine’s Day, Bill Maher has a message for all of us who are still in an abusive relationship…. with our Bank!

10. You aren’t in control More recently as we watch credit card companies increase rates, banks penalize their best customers, and governments shift and change policies on a regular basis we learned another valuable lesson: credit should be used as a safety net, not a crutch. With guidelines and terms of use left largely to the whims of corporate giants and legislators, you can be left feeling like a puppet on a string. The big lesson here: it’s their game, and they can change the rules whenever they want.

9. Optimism vs. blinders There is a big difference between optimism regarding investments, business trends, and economic forecasts, and just moving blindly ahead assuming that economic conditions will remain positive. Bubbles burst, businesses fail, and jobs are lost. It is a fact of economic life that we often lose sight of risk during the euphoria of the good times, and it can be a costly lesson that is all too clear when we are on the financial downslide.
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Former head of Apollo Real Estate Advisors, William Mack, now Chairman of real estate investment fund Area Property Partners, says that CRE is somewhere between  “a massacre and a total disaster.”

Have Banks that were “Too Big to Fail” gotten even bigger since the credit crisis?

This post has been contributed by Richard Weidel, a  Masters in Real Estate Investment Banking and Private Equity graduate student at Cornell University.

An interesting development is in the 11/6/2009 Commercial Mortgage Alert (CMA), headlined “JP Morgan Resumes CMBS Loan Program”. The article states that J.P. Morgan has restarted its conduit lending program, and plans to restart  securitization next year. With the debt markets still frozen, and a looming commercial debt maturity balloon coming in 2010-2011, new securitizations could offer much needed liquidity to a tight CRE market. While JP has indicated that it plans to only originate fairly conservative, fixed-rate loans for securitization, this could be the impetus needed to improve investor confidence in CRE and bring money back to the debt markets.

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The week of October 3-9

- The Treasury announced that three more firms will invest in PPIP: BlackRock, Wellington Management & AllianceBernstein

- The chairwoman of the FDIC has said what we’ve all been thinking, “Too big to fail” must end.

- If Blackstone decides to buy Anheuser-Busch InBev’s amusement park business, it would be 2009’s largest private equity deal.

- HSBC sold its U.S. headquarters in New York for $330M.

- A boon for the auto industry AND Manhattan real estate? GM has signed a major extension.
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