Commercial real estate developers in California may have an additional potential source for needed financing now that MetLife has been able to get rid of its designation as a Systemically Important Financial Institution, or SIFI. The designation, which is one that carries stringent regulatory requirements, was originally placed on MetLife along with eight large banks following the Wall Street bailout.
One of the requirements for institutions designated as SIFIs involves keeping substantial amounts of capital at all times. A recent decision by a U.S. District Court freed MetLife from that label. Besides freeing capital, losing the designation may also allow additional savings for the company as it will now have fewer reporting requirements. It is not yet known if the decision will be appealed.
The rules regarding SIFIs came with the 2010 passage of the Dodd-Frank Act. Companies and banks designated as SIFIs are those that are considered to be too large to fail because of their importance to the economy. MetLife may now be able to make its interest rates much more competitive with the rates offered by smaller lenders, and it now may also have more funds available to lend to a developer.
Commercial real estate development is a complex and competitive field, whether it be office buildings or warehouses. When a developer wishes to move forward with a planned project, finding financing for it may sometimes pose a problem. Developers may thus want ask their attorneys for help with identifying and securing the funding that will be needed. When competing loan proposals are received, an attorney can review them for potentially troublesome provisions.