Thursday, January 12, 2006

The New Gorilla

Once upon a time, banks could not get into real estate development. Let's face it, capital is the name of the real estate game, and banks have better access to it. They could simply run everyone else off the table.

Now though, the Treasury Department (specifically the Comptroller of the Currency) thinks it would be just fine for banks to get into real estate development and has approved Bank of America's plan for a hotel and PNC Financial Services Group's plan for a hotel/condo/office tower complex.

20 years ago a lot of financial institutions got too cozy to a lot of speculative investments, including real estate developments. The result was massive bailouts and even more massive mergers. This will be worse. And watch out for banks simply buying up developers and creating in-house shops. Loss of competition, vertical integration. Do we actually have anti-trust laws in this country any more?


Post a Comment

<< Home