WASHINGTON (MarketWatch) -- The Federal Reserve announced Friday it will take a key consumer-lending program and expanded it to help jump-start the commercial real-estate lending industry. The program, which will be launched in June, will provide government five-year loans to investors so they can buy commercial real estate securities. The goal is to revive lending in this market. The program is part of a larger Federal Reserve endeavor called the Term Asset Backed Lending Program launched in November, which seeks to bolster the market for consumer loans, automotive loans, credit card debt and small business loans. The Fed had indicated earlier this year that it planned to provide funding for commercial mortgage-backed securities, or CMBS, but hadn't provided details about the program and its launch date until Friday. In addition to CMBS, five-year loans will also be available in June for investors in student debt securities or small business securities. The TALF program plans to make $100 billion of its funds available for five year loans. So far, the TALF program has only offered loans with three-year maturities. So far, the Fed has closed two rounds of TALF funding. In March it received $4.7 billion in TALF requests from investors in its first round and $1.7 billion in investor requests in its second round last month. Many observers, including former Senator John Sununu, a member of the Troubled Assert Relief Program congressional oversight panel, have raised questions about why the program appears to have received tepid interest so far from the investment community. Treasury Secretary Timothy Geithner told Sununu and other members of the oversight panel last month that the program is having a "pretty good" beginning, while some potential participants are waiting to see how it operates before they feel comfortable participating. http://www.marketwatch.com/news/sto...x?guid={1F673D81-2D94-423B-B966-4A50C3A353ED} Insane. Simply insane.
The action in the REITs this week REEKs of this having been leaked to the select few as much as a week ago. Bush and his cronies may have been crooks but Obama and his cronies are no change at all. Change you can believe in, what a freakin' joke.
I'm guessing that's the reason for the spike. Why the fuck would they release this with 10 minutes left. Unfucking real.
It doesn't end, revive lending in the commercial real estate market, has anyone seen what commercial real estate looks like??? You don't need to go far, go you your local mall or main street and see how many empty lots and storefronts you see. Near me there are for sale and for lease signs everywhere, tens of thousands of SQ available. Even if they do create lending in this area again does anyone actually think people are going to run and start opening up businesses again. The answer is no, there is still an overabundance of commercial real estate that needs to correct.
More fed meddling in the markets, this will only make things worse. They are micro managing the economy. Anytime this bunch gets involved it always ends badly for the masses , yet it may benefit a few. The Federal Reserve board is a group of stooges.
I just called a guy I respect in CRE who is at the top of his game in Chicago and he told me the $100B is a joke. Most of the CRE out there is still on REITs books at anywhere between 20-40% over market value (look what the Hanncock building in Boston sold for last year compared to its previous sale, a 50% discount), no one has taken any write downs on value yet. If they did Chicago alone would eat up that $100B and that $100B isn't even all for CRE. I think that the SRS offers one of the best short opportunities out there right now and calls are undervalued. Looking for at least $40 this year.
I have said this time and time again, the more intervention in the market the more problems that will occur. Its almost impossible to find words to describe what is happening. Its incredible what is happening and how everyone thinks what is occurring is a fix for this economy, its not a fix at all, how anyone can possibly think that throwing trillions of dollars at this crisis is a solution is a complete idiot.
Interesting playbook - solve a problem of excessive debt finance being splurged on overvalued bullshit, by borrowing even more to spend on a different type of overvalued BS. I am sure destroying capital in this fashion will do a world of good!
Why waste time getting upset about this? Devaluation and money creation are always the solution to these indebtedness blowups. The powers that be won't allow a liquidation to occur.