SOURCE: New York Times

The House of Representatives voted on Monday to reject a $700 billion rescue of the financial industry. The vote came in stunning defiance of President Bush and Congressional leaders of both parties, who said the bailout was needed to prevent a widespread financial collapse. Supporters vowed to try to bring the rescue package up for consideration again as soon as possible, perhaps late Wednesday or Thursday.

Read full story »

SOURCE: AssociatedPress

In the latest news for capital markets, today we learn of the buyout from Citigroup of the operations at Wachovia Bank in a deal facilitated by the Federal Deposit Insurance Corp.

SOURCE: The Wall Street Journal

Insights shared about the possible salvation of commercial mortgage markets if the Treasury plan works...

Today, debt on office buildings, shopping malls, hotels and apartment complexes continue to perform well. The default rate for commercial mortgage-backed securities (CMBS) loans stands at just 0.47%, while commercial mortgages in life insurance company portfolios have a default rate of just .03%.

Nevertheless, the $200 billion annual CMBS market is now dead in the water. Credit to the sector from other sources has almost completely stalled.

Through the turmoil and panic of the past few months, the American commercial real-estate market has delivered some sorely needed stability to the U.S. economy. But even this stability cannot be taken for granted in these unpredictable times.

The credit markets are now blocked by a fear that can be removed by the Treasury plan. And as the problem is solved, credit will be more available to Main Street homeowners, small businesses and consumers of every type. A deep recession can be avoided. Now is the time to act.

Read full story »

SOURCE: Bloomberg

Still no end in sight for the troubles facing our commercial capital markets...

Government bonds around the world rose after talks on a $700 billion rescue package for the U.S. financial system stalled and Washington Mutual Inc. was taken over in the biggest U.S. bank failure in history.

Washington Mutual became the U.S. biggest bank failure in history yesterday after being seized by regulators and sold to JPMorgan Chase & Co. following $16.7 billion of customer withdrawals since Sept. 16. Financial institutions worldwide posted $522 billion of losses and writedowns tied to U.S. subprime mortgages since the start of 2007.

Read full story »

SOURCE: The Wall Street Journal

As we watch closely the government's bailout plans, this article explores the possible outcome for commercial capital markets...

For the commercial-real-estate players that were in hot water before the capital-markets crisis of the past two weeks, the temperature is rising.

Even creditors that were willing to make real-estate loans before the upheaval are pulling back, having witnessed the spectacle of some of the biggest names in finance and banking vanishing in a period of days.

To be sure, commercial real estate so far has fared better than residential properties. Many office buildings, shopping centers, warehouses and other income-producing properties are generating enough cash to pay their debt, and their default rates remain low.

Nevertheless, values have fallen because of the credit crisis and economic uncertainty, which is in particular creating headaches for investors who bought at the top of the market with short-term debt.

In the long run, liquidity might be restored to the market by the government's proposed $700 billion financial-bailout plan, which partly involves buying troubled commercial-real-estate debt.

On the other hand, many institutions may be reluctant to accept the government's price if steep discounts are required because the underlying real estate may still be performing well.

Read full story (subscribers only) »

SOURCE: MarketWatch

Third quarter survey shows a glimpse of investor optimism despite the hardships endured so far in 2008...

Buyers and sellers of commercial real estate remain on the sidelines, putting commercial real estate investments on hold in the short term despite an optimistic long-term investment outlook, according to the third quarter 2008 PricewaterhouseCoopers Korpacz Real Estate Investor Survey(r), released today.

Read full story »

SOURCE: Bloomberg

In this week of turmoil many investors are closely watching the news, and many were surprised by the Fed's decision not to lower interest rates as outlined in this article...

Federal Reserve Chairman Ben S. Bernanke is betting he can use targeted emergency loans rather than another interest-rate cut to pull Wall Street through the credit crisis.

The Fed kept the benchmark rate at 2 percent yesterday, citing risks to growth and inflation. Two days earlier, officials allowed securities firms to use equities as loan collateral to ease the impact of Lehman Brothers Holdings Inc.'s bankruptcy. Hours after the meeting, the Fed agreed to an $85 billion loan as part of a government takeover of American International Group Inc.

By rebuffing calls by some investors for a rate cut, the central bank aims to meet its mandate to ensure stable prices while counting on auctions of cash and Treasuries and direct loans to address the credit crunch.

Read full story »

SOURCE: Fox News

The government bailout of Fannie Mae and Freddie Mac may help stabilize an unsettled mortgage market, but it's also likely to cost taxpayers a bundle, Fox News's Doug Luzader reports.

SOURCE: Reuters

So the question now is whether or not the Fannie and Freddie take over is going to help or hinder the available capital sources for commercial real estate loans?

As investors and homeowners wait to find out how the federal government's takeover of mortgage providers Fannie Mae and Freddie Mac will aid the depressed housing market, buyers and sellers of apartment buildings are worried that proposed changes could hurt them.

Fannie and Freddie, the government-sponsored entities (GSEs) that are the major source of financing for buyers of apartment buildings, have taken on an even greater role after the credit crisis closed the spigot on the flow of other financing.

Because of the availability of financing from Fannie and Freddie, buildings with apartments for rent have outperformed other property sectors by 20 percent from March to May, according to commercial real estate research firm Real Capital Analytics.

Read full story »

SOURCE: Wall Street Journal

It seemed almost inevitable, now we'll cross our fingers and hope for the best in the commercial mortgage industry. Will we see the return of more available capital, even with tighter lending restrictions?

Investors cheered the U.S. government's seizure of the nation's two troubled mortgage giants, with stock markets rallying in the U.S. and abroad and mortgage rates falling. But obstacles remain if the Treasury's takeover of Fannie Mae and Freddie Mac is to succeed.

Meanwhile, new details emerged of the pressures that led up to Treasury's plan to take the reins of the troubled companies. In the weeks before the government's intervention, nervous foreign finance officials barraged Treasury Secretary Henry Paulson and Federal Reserve officials to find out what was happening with the mortgage giants, according to people familiar with the matter.

Read full story »