Blame Game

Federal regulators have assigned guilt for the recent regional banking crisis that has so impacted commercial real estate — and part of the blame lay with the regulators themselves. Also, if you’re in commercial real estate in New York state, beware the new budget out of Albany: It will basically break your heart.

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— Tom Acitelli, Co-Deputy Editor

Regulators Assign and Accept Blame in SVB and Signature Bank Crashes

The Federal Reserve and Federal Deposit Insurance Corporation (FDIC) released a pair of scathing post-mortem reports Friday that examined how Silicon Valley Bank (SVB) and Signature Bank collapsed in March, blaming the management at both banks for chasing short-term profits and failing to manage risk. The two federal regulators also pointed the finger at themselves for failing to adequately supervise both institutions, and emphasized that new guardrails must be put in place to stave off another regional banking catastrophe. Both agencies said they missed weakness in both banks prior to their collapses, with the FDIC blaming a lack of staff to conduct targeted reviews of Signature. The Federal Reserve report — commissioned on March 13 by Michael Barr, vice chair of supervision at the Fed — argued that SVB failed on March 10 because of “a textbook case of mismanagement by a bank,” and said its senior leadership “failed to manage basic interest rate and liquidity risk.”

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New York State Budget Looks Like a Dud for Commercial Real Estate

New housing development will have to wait in much of New York state. Gov. Kathy Hochul announced Thursday night that state leaders reached a tentative $229 billion budget deal nearly one month after it was due and without a plan to address the state’s affordable housing crisis. Instead of the 800,000 new homes Hochul at the beginning of the year had promised to create, the spending plan includes revisions to the state’s bail laws that give judges more discretion over setting bail, increases funding for the state’s transit agencies, hikes the minimum wage to $16 an hour, and adds about a dozen new charter schools. “I know this budget process has taken a little extra time but our commitment to the future of New York was driving us,” Hochul told reporters at the state Capitol in Albany. “What was important was not a race to a deadline but a race to the right results.”

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