Monday, June 23, 2008

When Bankers Decorate ...

by Bill McBride on 6/23/2008 11:21:00 AM

"When the bankers are selecting color schemes, you know a project isn't going well"
reader Brian, June 23, 2008

This article from Bloomberg is a good summary of the banks exposure to commercial real estate (CRE): Deutsche Bank Lost in Vegas as Defaults Make Lenders Decorators

Workers building the $3.5 billion Cosmopolitan Resort & Casino on the Las Vegas strip are getting used to their financiers from Deutsche Bank AG. Lately, the weekly visitors from 60 Wall Street have been critiquing plans that called for a black-and-white decor.

``They are considering changing the color palettes and finishes,'' said Travis Burton, a vice president for lead contractor Perini Corp., who outfits the bankers with safety vests and hard hats before touring the site.
...
Deutsche Bank ... is one of a dozen investment banks that rode a five-year boom in commercial real estate by financing developers and landlords while profiting by packaging loans into securities. Then credit markets seized up in 2007, sticking banks and brokerage firms with commercial mortgages and bonds. The amount for large U.S. banks alone: $169 billion ... The resolution may take more than providing advice on drapes as the economy falters and mall vacancies increase.