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Debt Markets Could Be In For A Tough Summer

Between JP Morgan and Greece the summer may be long and stressful

By Joel Ross | Updated on May 20, 2012

While there is no risk to JP Morgan from the mistakes made on their trades in London, the ramifications may have impact on the debt markets and so on real estate indirectly. We are already seeing the political types going vocal and holding hearings, even though there is no real federal issue involved. This was not Federal money, there is no FDIC issue, no taxpayer issues or any real need for Congress to hold a hearing. It is pure election year politics. There is surely no criminal behavior. That bit is purely to admonish Jamie Dimon for having the audacity to publicly raise real legitimate issues about Dodd Frank. The fear everyone now has is that Congress will go overboard on the regulations and instead of helping control risk, they will inhibit lending and possibly increase risk if they overly restrict banks hedging.

As though we needed even more possible underwriting scrutiny than we already have. Now all banks are really going to be in a risk off mode to avoid any issues with regulators. Loans will probably take even longer than they had to get closed similar to what has happened in the residential market.

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