More Regulation Expected in Wake of Recession
California Real Estate Journal
By Julie Nakashima
...Stan Ross, chairman of the Lusk Center for Real Estate at the University of Southern California, helped to set up the Resolution Trust Corporation, which Congress authorized in 1989 to deal with problem savings-and-loan institutions. This current recession is worse, he said.
"What happened this time is we lost absolute total liquidity in the marketplace and it was across the board in terms of capital markets," Ross said. "The last time around, we took the institutions over, we liquidated them, sold them, sold their assets. But it wasn't an overall capital markets transaction."
Back then, the industry vowed never again would it allow itself to get into such dire straits. But 20 years later, the industry is facing even bigger challenges. In the aftermath of that crisis, people did try to address the causes and put in place measures to prevent it from happening again.
"Some of the lessons we learned and what was put in place was that we had more reporting requirements, increased transparency in terms of the amount of detail and the frequency," Ross said. "Examiners came in looking more frequently and carefully, and we had some pressures with respect to the amount of required capital and liquidity. All of that helped in terms of the early stages. What we didn't have back then was a mortgage-backed securities market to the depth that we have now with CMBS and CDOs."...