November 19, 2009
How’s that for a title? That’s the title of a Forbes article out today by Stuart Saft, a partner at law firm Dewey & LeBoeuf who makes the argument that court decisions could be the nail in the coffin. We’ve discussed some of the decisions here, including the Citigroup deal in New York.
In the last few weeks there have been a series of court decisions that will have repercussions in the credit markets for years to come making an already cautious lending community absolutely paranoid, and restricting credit even if available.
Mr. Saft lists a slew of steps which should be taken to help avoid a collapse. Amongst them:
The Federal Reserve should provide a credit facility to commercial real estate owners as a lender of last resort with the government obtaining an equity interest (but not control) over the real estate in order to avoid the real estate from being dumped on the market, thereby further depressing values, which will also provide lenders with a way to liquidate their loans.
Lenders should not be required to appraise real estate that they own, are part of special assets or the subject of workouts using a mark-to-market standard but, recognizing the current aberration in the market place, using a “fair value” approach that recognizes the need to sell in an orderly transaction. What helped to destroy the S&L industry in the late 1980s and bring on the last real estate recession was the need of solvent banks to mark the real estate assets to market.
but his last one is the only one that resonates with me…
Finally, the federal government needs to focus on policies that will produce jobs and an environment that will spur job creation.
Jobs is what it comes down to …. a light at the end of the tunnel. We don’t need to be out of the woods, we just need to see out of the woods. Job growth is that lens. The rest is window dressing.
- Tishman Loses Stuyvesant Town Ruling
- Fed Concerns About Commercial Real Estate Grow
- Citibank Forced to Resume Lending on Failed Mall Project
- FDIC Adopts Policy Statement on CRE Loans to Help Banks
- Deloitte’s Theory on CRE: Could Be, May Be, and Expected To