Market Talk

Newswires columnist Max Murphy writes:

Worked pretty well last time, why not try it again?

Put together Bank of America, Fortress Investment Group, and a new, $460 million CMBS issue backed by commercial real estate in Florida. What could possibly go wrong?

Call us once bitten, twice shy, but it seems a little soon to be jumping back into the CMBS market, the collapse of which amid the recession roiled many investors and firms.

This is a bank, BofA, still in hock to the U.S. government because its descent into riskier assets like CMBS helped cause its need for tens of billions in emergency cash to survive. Many other banks have since regained sufficient health to repay their Treasury Department bailouts; BofA, not so much.

It’s partnered with troubled asset manager FIG, whose real estate assets are backing the seven-year issue. Things were so tough for Fig that 90% of its market capitalization vanished last year.

Add to this the fact that the properties are in Florida, one of the hardest hit real estate markets in the U.S. And, it’s not eligible for funding through the Treasury’s Term Asset-Backed Securities Loan Facility, or TALF, program.

This could end badly, right?

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One day, we had government backing, the next...pfft.

This blog, like most of them out there, is a labor of love (and sometimes, like most of them out there, just a labor.) But the job we were hired for, the one that really pays our bills, is the Market Talk column we edit and write for Dow Jones Newswires. We write the two side by side daily, but often the column gets first attention, and things we want to write about here fall by the wayside.

Which is why wer’re getting to yesterday’s news only today. We were particularly struck by word that Florida mortgage lender Taylor Bean – the 12th largest home-mortgage lender through the first half of 2009 - closed up shop, a day after the Federal Housing Administration barred the company from issuing FHA-backed loans. We understand that FHA loans were what the company did, but still it strikes us that Taylor Bean’s fate may not be so very “company-specific,” as the Wall Street boys like to say.

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