Devil Is in Details, Says NMHC, of Proposal to Overhaul Financial Regulatory Apparatus

By Anuradha Kher, Online News EditorWashington, D.C.–Treasury Secretary Henry M. Paulson Jr.’s proposal to overhaul the regulatory apparatus that oversees the country’s financial system is expected to significantly expand the authority of the Federal Reserve over financial markets, but will likely not have a major impact on multifamily borrowers, according to David Cardwell, vice president of capital markets and technology at National Multi Housing Council. “As borrowers, it does not really affect us. If I were a security issuer, or bank lobbyist, I would be all over this proposal with my suggestions,” Cardwell tells MHN. He goes on to say that based on the current proposal, the standards for borrowing and lending will become tough “but we will not have our sources of capital cut off. It’s like flying. You can still fly but you have to go through rigorous screening and probably pay more as a result. Also, if regulatory oversight curtails the CMBS market, it would have an impact on the multifamily industry.”The proposal is to consolidate federal agencies that regulate the securities and commodities futures markets and eliminate a third agency, the Office of Thrift Supervision. Insurance companies, which have long been regulated by the states, would be allowed to choose to have a national charter and be supervised by a new agency under the Treasury Department.Cardwell does not have an argument against the proposal as of now, but, he says, “The devil is in the details. There is nothing to worry about till it is passed.”“For the time being, we are focused on the GSE legislation, which will have a greater impact on multifamily. Is expected to pass in the next couple of months,” says Cardwell.