Browse Tag: fdic

16 Banks Sued By FDIC Over LIBOR Rigging

A Washington Mutual in Naperville, Illinois pr...

 

It’s hard to find a commercial property lease or purchase finance calculation that doesn’t touch the LIBOR interest rate in some way. The benchmark interest rate is used so commonly, the total transactions subject to it is estimated in the trillions of dollars.

As I’ve written before, LIBOR lurks in so many corners of commercial real estate, it’s big news when the banks responsible for the rate’s publishing are suspected of rigging the number.

And it’s even bigger news when the US government’s biggest insurer of bank deposits — the FDIC — takes those banks where the US Justice Department won’t: to court. Which is exactly what happened this afternoon:

The FDIC, acting as receiver for 38 failed banks including Washington Mutual Bank, IndyMac Bank FSB and Colonial Bank, claimed that institutions sitting on the U.S. dollar Libor panel “fraudulently and collusively suppressed” the U.S. Libor rate. Also named in the suit, filed today in Manhattan federal court, is the British Bankers Association, an industry group.

The failed banks “reasonably expected that accurate representations of competitive market forces, and not fraudulent conduct or collusion,” would determine the benchmark, the FDIC said in its complaint.

Regulators around the world have been probing whether firms colluded to manipulate interest-rate benchmarks including Libor, which affects more than $300 trillion of securities worldwide. Financial institutions have paid about $6 billion so far to resolve criminal and civil claims in the U.S. and Europe that they manipulated benchmark interest rates.

The cost for global investment banks could climb to $46 billion, analysts at KBW, a unit of Stifel Financial Corp., said in a report last year. JPMorgan Chase & Co. and HSBC Holdings Plc may face a European Union complaint as soon as next month from the bloc’s antitrust chief.

Better late than never — and with TBTF banking’s massive influence over US and international law, “never” was certainly in the cards.

 

 

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The Great Broker Shakeout And Social Media

Commercial real estate is a collection of people. So what is the financial downturn doing to that collection? A recent post at NAI Global summed one aspect up well by pointing out that the commercial RE brokers who were never really committed to this industry are moving on. This kind of shakeup leaves behind two groups:

1) Older brokers who built their careers on the ability to network, make the essential contacts and to be a indispensable part of the local economic picture.

Image representing Twitter as depicted in Crun...

2) Younger entrants who are learning everything they can about how to do commercial RE in a market characterized at the same time by both great upheaval and incredible opportunity.

Much has been written about the upheaval.  But what is new about the modern marketplace that shows such potential?

For one thing, you!  You’re using social media – you’re reading this blog post.

There will never be a substitute for concentrated research on properties or markets, so don’t think that I’m saying that blogs, Twitter, Facebook and LinkedIn will supplant the hard information that commercial brokers need to be successful.

But it is absolutely true that social media tools have already profoundly changed the part of the business that, when mastered, will sustain a professional through decades and through whatever economic upheavals come.  I’m talking about the art of making contacts.

Take one example.  When you have a buyer or renter and they’re hot on a distressed office property that you know the FDIC is handling, you’re in a real jam. There’s no easy way to get that conversation started; you might place dozens of calls to a bank’s REO department and get nothing but runaround or silence.  One look at the bureaucracy of FDIC is enough to give you nightmares.  Time slips away and that buyer’s love cools – all on your watch.

But as shown in the NAR Commercial Technology and Intelligence Briefing Podcast for October,  social media can absolutely make all the difference to that scenario.  You can listen to Robert Hamman, advisor with Sperry Van Ness tell the story of how Twitter helped him get through the above by giving him the right contacts to do a deal – and then some.

That’s just one example of what kind of world is being left by the Great Broker Shakeout.  Lots of good news to be had – and plenty of ways to share it.