Is Lending and capital raising going to get more regulated and complicated than we had all hoped. Are more initiatives to investigate and regulate the financial services industry on the way? Are Politicians out to make headlines and that means to get big name lenders on some charge and to create new regulations?
The legal bills for the major banks are now in the billions. Huge amounts of senior executive time is being devoted to fending off these attacks. This diversion of capital and productive executive time and energy is debilitating to the economy in that it saps those same things from being devoted to actually making loans and putting capital into the economy. It is not that I think the lenders did not commit fraud or do other things that deserve punishment or fines. It is that these issues will now be way over played by the politically opportune, as they have been in Washington. Instead of being handled in the normal course, and in a consolidated single jurisdiction, instead we have the various federal regulators. Congress is all headed by aggressive political people. They will all compete to make the biggest splash headline. To show they are the toughest. In short it will be a contest which will do nothing good, and a lot bad by consuming capital and time of the banks.
We do need a lot of better regulation and control to prevent the sort of blatant bad acts I and all of you witnessed in the mid decade, but between the nightmare of parts of various politicians out to prove how mean they can be, and all these new regulators looking for a cause, I fear the banking and CMBS markets will be hobbled far more than is good for the markets and the country. As is typical in these matters, the pendulum swung way too far to bad acts and now it is swinging way too far with the politically motivated, especially with a presidential election and other major elections next year. The lobbyists and industry organizations never had so much to do to try to bring some level of reality and fairness to what is happening. If they fail then the damage caused by the collapse of the markets in 2008 will get extended and exaggerated for several more years. (joel ross,globe st