Ex-commercial banker: Don't bail out America's "credit-drunk" commercial landlords and real-estate bankers
An expert on commercial property lending, in a letter published in yesterday's Wall Street Journal, suggests that commercial-property developers should be ashamed at asking for a federal bailout. Mike Offitt wrote, in part:
Unlike residential borrowers, most commercial landlords don't live in their buildings, and unless they are pleading stupidity, they understood perfectly, as did the lenders themselves, that the loans they were seeking from overeager conduit and securitization lenders were too generous. They decided to roll the dice and got rich with these cheap and easy funds. Now they are asking their formerly rich Uncle Sam to bail them out as their loans come due.
As the founder and former head of Deutsche Bank's commercial lending unit, and former senior trader of CMBS and commercial loans for Goldman, I am well aware of the perils of letting commercial-property borrowers fail: Either their lenders will have to extend them new terms, or they will face bankruptcies and tax recapture issues. Their bankers or securities holders will have to take losses and new investors will get to buy their holdings at deep discounts. Any other solution would be a travesty. The only thing more startling about the suggestion that the Treasury bail out the likes of William Rudin, Stephen Ross and Steven Roth is that they had the nerve to raise it. Washington should focus on making REMIC and securitization laws more flexible to allow extensions of loans or collateral substitution, not giving America's credit-drunk landlords and real-estate bankers a mulligan on the taxpayer dime.
More on Offit.
Unlike residential borrowers, most commercial landlords don't live in their buildings, and unless they are pleading stupidity, they understood perfectly, as did the lenders themselves, that the loans they were seeking from overeager conduit and securitization lenders were too generous. They decided to roll the dice and got rich with these cheap and easy funds. Now they are asking their formerly rich Uncle Sam to bail them out as their loans come due.
As the founder and former head of Deutsche Bank's commercial lending unit, and former senior trader of CMBS and commercial loans for Goldman, I am well aware of the perils of letting commercial-property borrowers fail: Either their lenders will have to extend them new terms, or they will face bankruptcies and tax recapture issues. Their bankers or securities holders will have to take losses and new investors will get to buy their holdings at deep discounts. Any other solution would be a travesty. The only thing more startling about the suggestion that the Treasury bail out the likes of William Rudin, Stephen Ross and Steven Roth is that they had the nerve to raise it. Washington should focus on making REMIC and securitization laws more flexible to allow extensions of loans or collateral substitution, not giving America's credit-drunk landlords and real-estate bankers a mulligan on the taxpayer dime.
More on Offit.
Sustainable Hope and Help amid a Sea of Despair and Demands
ReplyDeleteAmid all the bad news and demands being placed on the President-elect Obama transition team this holiday season, Sustainable Land Development International (SLDI) offers a reason to hope for the future by formally submitting its offer of assistance to help boost the team's economic recovery plan and policy agenda – and save the country billions in the process.
SLDI is a cooperatively-owned organization of entrepreneurial developers, engineers, builders, planners, architects, financiers, attorneys, and others in private and public service, who deliver practical land development solutions to some of the most important social, environmental and economic issues the country faces. In answer to the President-elect’s call to “join in the work of remaking the nation.”, in a formal proposal to the Obama team, the organization has offered a public-private partnership, its Sustainable Land Development Best Practices System and the breadth of its research and collective knowledge to combat the country’s economic woes, enhance environmental stewardship and increase social responsibility - all at the same time.
Obama’s plan calls for a massive public investment in infrastructure as a way to create more than a million new jobs and reposition the country more competitively for the future. The plan has received broad acceptance, but is now beginning to come under increased scrutiny.
“President-elect Obama is beginning to receive criticism for his plan to invest up to $1 trillion dollars to stimulate the economy and implement the kind of change the American people mandated when they voted him into office in November,” said Greg Yoko, SLDI president of industry relations. “He’s being criticized from the left, who say the recovery plan isn’t socially or environmentally friendly enough, and from the right for the unprecedented level of government intervention and deficit spending his plan currently advocates. SLDI can offer the incoming U.S. administration the comprehensive systems and technologies to enable the public sector to enhance its effectiveness and quality – and spur the kinds of public-private partnerships and holistic development processes that will reduce government intervention, save taxpayers billions, and deliver greater environmental and social stewardship at the same time.”
According to SLDI, sustainable land development best practices optimize the decisions and implementation of the plans Obama has outlined at http://www.change.gov. The new SLDI best practices system offers the metrics to help development projects, such as those included in Obama’s massive infrastructure initiative, achieve greater ecological stewardship and social equity, but do so through the simultaneous achievement of greater economic results. These holistic “triple-bottom-line” results have long been sought but rarely achieved due to the narrow focus of each of the specialized participants in the land development process. However, through an industry-developed decision model and best practices system, SLDI believes it has, for the first time in history, developed the “holy grail” blueprint for the future U.S. economy, as well as the rest of the world. This holistic triple-bottom-line approach lays a solid foundation for the long-term sustainable development of the very infrastructure of our civilization. Sustainable development starts with our national and global infrastructure. If it is unsustainable, ultimately nothing else can be.
About Sustainable Land Development International (SLDI) – Sustainable Land Development International is a developer-led and cooperatively owned organization of industry stakeholders dedicated to promoting and enabling land development worldwide that balances the needs of people, planet and profit – for today and future generations. SLDI publishes Sustainable Land Development Today and Sustainable Urban Redevelopment magazines, produces the Land Development Breakthroughs educational events, and delivers a number of sustainable development technologies and services such as green building, ecosystem restoration, clean and renewable energy systems, carbon sequestration, soil enhancement, water purification and retention, and others.
Your participation and comments are welcome.
Terry Mock
Executive Director
Sustainable Land Development International
www.SLDI.org
www.SLDTonline.com
www.SURmag.com
www.LDBreakthroughs.com
Obama Sounds the Sustainable Development Horn - http://www.sldi.org/newService/SLDIDec2008.html
Sustainable Land Development - Bridge to a New Global Culture - http://www.sldtonline.com/content/view/580/1/