FDIC Admits Mistake; Microsoft's New Stores; GGP Bonuses (Weekend Roundup)

Here are some of the big news and notes from blogs and news outlets from the past couple of days. There remains a lot of contradicting information on commercial real estate. Should we be worried? Should we not? There are posts here arguing both outlooks.

  • A Bloomberg story from this morning features an admission from the FDIC that it failed to enforce its own guidelines to rein in excessive commercial real estate lending by at least 20 banks that later collapsed.
    The FDIC's Office of Inspector General analyzed 23 lenders taken over by regulators from August 2008 to March and found that for 20, the agency's examiners didn't identify the issue early enough or should have taken stronger supervisory action after recognizing the banks had dangerously high levels of the loans before they failed. The findings are in separate reports posted this year on the inspector general's Web site.

    “It's often we'll see in our reports that the FDIC detected problems in the bank in a timely fashion, but in some cases forceful corrective action wasn't required by the FDIC to be taken quickly enough,” Jon Rymer, the FDIC's inspector general, said in a telephone interview.

    The failure to follow up on the 2006 recommendation, that banks avoid letting commercial real-estate holdings exceed 300 percent of capital, has emerged as FDIC Chairman Sheila Bair steps up her effort to expand the agency's role in regulating the financial-services industry.

    That's not so promising.

  • CRE Beat writes about a recent Capital Economics release that argues that commercial real estate loans won't crater the financial system. The main data point the blog highlights is the fact that only 18 percent of large institutions' loans are on commercial real estate. Another post from the blog examines Moody's CPPI index and the declines in prices for commercial real estate.
  • There have been some initial reviews skeptical of Microsoft's retail strategy. A WSJ blog post looks at these criticisms, but also points out that many people thought Apple would fail as a retailer as well. And look how well that's turned out?
  • Wall Street is planning on potentially record bonuses this year, so why shouldn't GGP pay out bonuses as well? A Daily Herald report looks at the REIT's plans. It is seeking a bankruptcy judge's permission to spend as much as $47.5 million a year for two years on bonus payments, $11.6 million of which would go to the top 12 executives.
  • Taubman was ranked as one of the best places to work in a new Detroit Free Press report.
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