Rep. Carolyn Maloney and Rep. Jerrold Nadler attended the congressional hearing today
New York City Rep. Jerrold Nadler criticized the federal Troubled Asset Relief Program at a Congressional hearing today on the impact of Washington’s efforts to spur corporate and commercial real estate lending.
He told the oversight panel that the United States government should set up new banks or directly fund small, stable banks as a way of increasing commercial lending in the country.
Nadler said the Troubled Asset Relief Program as currently designed will not be successful, and suggested his idea in testimony before the Congressional Oversight Panel, which is overseeing the federal government bailout.
“Take a large amount of money — I’m taking this number out of the air — $100 billion… and form brand new banks,” he said. If that was “too radical…take a large amount of money, say $100 billion, and fund existing small and regional banks that have not engaged in risky speculation and derivatives,” he said.
“At least it would get the credit flowing again,” he added.
The panel was held at the Rosenthal Pavilion at New York University which was hearing testimony from Nadler, Rep. Carolyn Maloney and business and banking industry executives.
“The commercial real estate time bomb is ticking,” Maloney said, with $400 billion due to be refinanced this year.
The event was part of a series of public hearings around the country the panel has hosted.
In other testimony, Kevin Pearson, executive vice president and metro area executive at M&T Bank, compared the commercial real estate lending practices during the boom years to the speculative residential lending market that has been blamed in part for the financial meltdown.
“The 2005 to 2007 vintages of [commercial mortgage backed securities] are very analogous to subprime on the residential side,” Pearson said. “We had a very difficult time growing our real estate portfolio,” he said, because the pricing did not make sense to M&T Bank executives.