Research
Third Quarter 2009
Dear Colleagues and Friends,
It is our great pleasure to announce our first quarterly report. As transaction professionals and advisors we have extensive access to data on the real estate and capital markets. Our research platform offers daily updates on all key banking rates and the LIBOR swap rates. Once each quarter we will provide you with a capital markets update and information on loan sales.
At the one-year anniversary of the collapse of Lehman Brothers the Senate Banking Committee is proposing regulatory reforms to prevent another financial meltdown. The proposal calls for curbs on the Fed's bank-supervision and consumer protection powers. A new banking regulator would monitor systemic risk to the economy and enforce rules on financial products.
At the present time it is unclear which direction the government will take to provide relief for the commercial real estate markets. Lenders continue to be reluctant to lend and the pileup of distressed properties is accelerating. It is estimated that about two-thirds of the $800 billion in commercial real-estate loans held by banks that will mature between now and 2014 are underwater. More than 2,600 banks and thrifts have commercial real estate loan portfolios that exceed 300% of total risk-based capital, according to an analysis of regulatory filings by The Wall Street Journal. Nearly all of those institutions have less than $5 billion in assets.
The proponents of regulatory flexibility believe that banks should not be required to reserve capital against loans that are underwater but generate enough cash to pay debt service. The critics fear that the troubled loans remaining on their books will discourage banks from lending, reminiscent of Japan's "lost decade" in the 1990s.
We look forward to providing you with vital information and new ideas to find the best solutions for your transactions.
Mortgage Equicap
