Capmark Financial Group, one of the largest commercial real estate lenders in the US, said this week that it was seeing huge default rates and that it could be headed for bankruptcy.
It’s the latest in a string of decently-sized, non-Wall Street banks that appear headed for the dustbin of history (or into Sheila Bair’s loving embrace). So far there have been 84 this year.
What caught our eye in Bloomberg’s report was this paragraph:
Capmark’s holdings include a banking unit based in Salt Lake City with $11.1 billion in assets and a “well- capitalised” ranking from its regulators, according to the bank’s Web site. Deposits stood at $8.4 billion on June 30, according to the company’s quarterly statement.
Two things stand out:
- Regulators described it as “well-capitalised,” which means that they were totally behind the curve.
- Capmark is based in Pennsylvania, but capitalised in Utah, making it one of several banks to have set up in the state for regulatory arbitrage purposes. If we’re going to eliminate multiple Federal regulators, we might as well get ride of states, too, since shopping around for favourable states may be just as big of a deal as shopping around to be regulated by the Office of Thrift Supervision.