Late last year, when the Bank of China made an $800 million real estate loan to refinance a major Park Avenue office building, I didn’t think much of it. To me, it was just the latest invasion of foreign money coming after America’s trophy properties. Going back 30 years ago, it was the British, the Dutch and then the Japanese swooping in to buy cheap only to get their asses handed back to them a few years later.
My favorite was that Japanese investor who tried to buy the Pebble Beach golf course so he could take it private and sell million-dollar memberships to his country men. Somehow, wiser heads prevailed.
So now it’s China’s turn. They certainly have the bucks, and though they appear to be more conservative at this point, it’s only a matter of time until they whip out their big guns.
This was driven home last night at dinner at Washington’s Palm restaurant. We were seated next to a large party of Chinese businessmen. Ours was a family dinner with a nephew, an associate at a major D.C. law firm who had served an apprenticeship in Shanghai.
After the neighboring table departed, the nephew’s jaw finally closed.
“So what were they talking about,” we all wanted to know.
“Basically, they want to buy every premium building and shopping center in this country.
“They think we’re soft. A bunch of dumb asses who are lazy and stupid. They think we’d make another good tourist destination like Hawaii.”
“I didn’t think they thought so highly of us,” I said.
“But far more importantly,” he continued. If I understood them clearly, they plan to buy Bank of America, Citibank and several of the major regional banks.
“Then, they’ll lend aggressively until the next recession, when they’ll call in all the loans and wind up owning all those businesses. That way, they can pick maybe a quarter of what’s left of America for peanuts . . . our peanuts.”
“But, nephew, how are they going to do that from Washington?”
“Regardie, you haven’t been listening. With all those banks, they’ll have a branch on every corner in every one-horse town in this country. They’ll revolutionize banking by operating 24/7/365, just like laundromats.
“I bet those boys will be charging a hefty vig, too” I said.
The nephew smiled knowingly.
At that moment, our Palm server couldn’t help but chuckle.
“What’s so funny,” I asked.
“Earlier this afternoon, Mr. Chin, the big guy at the table next to you, made my son a loan for a Puppy Palace franchise. $150,000 at two over prime. And in only ten minutes.”
Needless to say, we couldn’t believe it.
John, the server, explained:
“I’ve waited on Chin several times recently. Then today, I mentioned how much difficulty my kid was having getting financing for his start-up. Chin said that he was a banker and maybe he could help. He asked a few questions — my son’s Social Security number, his credit score, etc. Then he opened his brief case, which had a built-in computer, entered the data and instantly out popped a loan agreement for me to co-sign with an e-mail copy to my son’s smart phone. My son accepted immediately and Chin handed me a check for $75,000 and a line of credit letter for another $75K. He bowed, I bowed and that was that.”
“No shit,” I exclaimed.
“Except for the tip. He only left 12%.”
“You’re lucky,” I said. “Bankers normally leave 10%.”
Bill Regardie is the founder of Regardie magazine.