ATLANTA-At the MBA CREF12 Conference’s opening session Monday morning, major factors affecting the industry were distilled down to two familiar topics, both gaining steam as the year progresses: the economy and the upcoming presidential election.
In his opening remarks, David Stevens, president and CEO of the Mortgage Bankers Association, started off by contrasting how conference attendees—which he said numbered 2,300—run their business versus how the political machine at work in Washington, DC runs theirs.
“You make real decisions, you meet real deadlines, you have real contracts—you live and die by the rules of your business, but Washington doesn’t,” he told the crowd. “Short term thinking is really commanding the rules of the road in Washington. The business world functions on real deadlines.” He said that this was the case for both sides of the political aisle. “As custodians of capital you don’t have the right to stall,” he went on to say.
Later, during the 2012 Political Update portion of the opening session, two political foes joined Stevens to share their insights into how the looming presidential election might play out—and how this process might impact financing in the commercial real estate industry.
Former chairman of the Democratic National Committee Terry McAuliffe said that he predicts that President Barack Obama will be reelected, in part due to recent jobs gains, though he detailed other positives for the incumbent president as well.
“Under President Obama, we have had 23 straight months of job growth, 3.6 million new jobs created and saved the auto industry,” McAuliffe said. “We’ve made $7 billion on the TARP investment, people are going back to work. We’ve got a long way to go but we created a quarter of a million jobs last month. If we can continue that trend along, it takes a huge argument away from the Republicans.”
Not surprisingly, Ed Gillespie, former chairman of the Republican National Committee, disagreed. “Obviously, I have a different take from Terry on the state of affairs in 2012,” he said. “The fact is when you look at the historic indicators for this presidential election cycle, this is a very tough position for the incumbent president to be in going in to November.”
Unemployment, consumer confidence and job approval metrics all put the president “in very bad shape,” Gillespie added. “In nine swing states, including North Carolina, Virginia, Florida, New Mexico, Nevada, Oregon, Wisconsin, Ohio President Obama is not just below 50%, he is below 45% job approval. He is at 45% job approval in Pennsylvania.”
Stevens asked the two what they’d each suggest for either Romney or Obama to get the markets back on track and what the banking industry might do to improve its record with the consumer.
McAuliffe said that he’s been in the commercial real estate business, having owned thousands of property units and built shopping centers. “I think more than anything else, the best thing for you is going to be an increasing economy, where we can get some more liquidity in the system,” he said. “I don’t think there’s much your industry association can do on its own. A healing economy will lift all boats.” He added that it was crucial to find ways to assist people in staying in their houses.
“I’m for people staying in their houses, too—that is the American dream and having people foreclosed upon is awful,” Gillespie said. “That said, I do think that stopping the natural marketplace from clearing some of these houses is stifling the marketplace right now. It’s having an adverse affect.” People, he said, were waiting for the market to clear before buying houses again.
Regarding regulations, Gillespie said that Dodd Frank is “freezing the marketplace,” in fact causing some bankers to have more compliance officers than loan officers trying to figure out and comply with the regulations. “When you have more compliance officers than loan officers, you’re going to have a liquidity problem,” he said. “You’re going to have a hard time getting money out there where it needs to be in the economy.”
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