What is now a long time ago, in the depths of the great recession, many articles were written about how the “Shadow Banking” (read unregulated private lending) sector was going to provide liquidity to markets, real estate and otherwise, when the commercial banks were unable to do so as a result of their tattered balance sheets, and I suppose to fill some of the gap for the 297 banks that failed in 2009 and 2010(1)
In the author’s view this prophecy never really came home to roost. We all know it was really hard to get a construction loan from a bank, but the banking system didn’t actually fail, and new players, like Investors’ Bank, who had never made any significant numbers of commercial real estate loans prior to the recession, came on the scene and grew their balance sheet to over $25 billion in assets presently from $12.7 billion at year-end 2012. They basically dominated this publication’s trade area in the multifamily space, and it was rumored that even the President and his son-in-law have real estate loans outstanding with them. This decision was great for the shareholders and great for the real estate economy, and there is nothing to do other than to tip your hat to the intrepid boards who made bold decisions in those tough years.