Comments on: Commercial Real Estate Will Collapse!

By: Name

Name — Wed, 25 Nov 2009 20:42:36 +0000

If Bernanke wanted to bail out Main Street, why didn't he do so by wiping out equity, haircutting bondholders, and leaving reconstituted financial institutions in the place of the old ones. Apart from the direct financial justice, this would have returned moral hazard into investors' vocabulary and prevented the bubble that is the equity market now from forming. Ugh, such scum.

By: Sam

Sam — Fri, 20 Nov 2009 18:50:48 +0000

This bank leeway needs to stop. We're quickly heading down a path toward Japan of the 90's, where banks hid their asset values for a decade. The result is zero to negative growth, since the economy freezes without price discovery.

By: Square Feet

Square Feet — Fri, 20 Nov 2009 15:25:07 +0000

I agree the new FDIC guidelines give enough leeway to banks on assets which could arguably be classified as performing. The rest of the assets are simply toxic to growth and lending and need to be dealt with. A credit facility provided by the government would exacerbate the length of time it will take to arrive at a meaningful recovery because the debt will not be eliminated.

By: @JoeStampone1

@JoeStampone1 — Fri, 20 Nov 2009 15:15:49 +0000

I certainly agree with the last point, the success of the CRE industry hinges on two things: the ability for the U.S. to recover the nearly 7.2 million lost jobs and the ability to restore consumer confidence. That's all it comes down to. We're clearly in for a slow recovery.

By: Joshua

Joshua — Fri, 20 Nov 2009 07:25:20 +0000

the credit facility idea is asking for nothing but trouble. it would be a wonderful thing for the industry. i dont think it should be done though. spur job creation immediately. were looking at over 3 years to absorb lost jobs. that needs to be cut down significantly and immediately.

the third item is interesting. but open to way too much interpretation. the recent 33 page guideline provides more than enough flexibility for lenders to get loans back to "performing" status. at that point banks should be setting aside their expense reserves for the deal and prepping to foreclose and sale should the workout not take. i had an interesting meeting with a small bank president tonight where we discussed these items in depth.