Stan Ross, Chairman of the Board of the USC Lusk Center for Real Estate and Distinguished Fellow was quoted in the May 8, 2009 edition of Investor's Business Daily:
Bank Tests May Change Mortgage Lending but Extent of Impact Debated
Investor's Business Daily
...Will ailing real estate get a boost now that the biggest banks know the results of federal stress tests?
Perhaps. The tests are meant to assess how big banks would fare if the economy were to weaken further, and to get stragglers to raise money, privately or from government. Ideally, this will all leave banks in a better position to make new loans, including real estate...
...Stress tests might cause an "interesting result" in regard to banks' distressed-home sale policies, says Stan Ross, chairman of the Lusk Center for Real Estate at the University of Southern California.
Bank Reactions Awaited
In assessing how a bank would fare in a deeper recession, he says, the tests might cause some banks to cut their losses by selling bad assets fast, in anticipation that prices might drop even more down the road.
"The good news would be they sell it, get the cash and reloan it out," Ross said. "They move from a stale asset to a good asset..."
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May 8, 2009