Banks As Developers

"The question is whether these two projects suggest that federal regulators will make it easier for banks to compete directly with developers. Regulators have traditionally limited banks from owning and developing commercial properties since a sudden decline in the real estate market could put bank capital at risk, especially if the bank acts as both the owner and developer of a project.

...Real estate attorney Russell Bershad is also puzzled at why any bank would want to enter the development fray, and he sees some important differences between bankers and developers. "Developers are so nimble and non-bureaucratic, not to mention willing to take risks," says Bershad, chairman of the real estate department at Newark, N.J.-based Gibbons DelDeo."