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Economic Rebound Slowed Last Quarter – During normal times, growth in the 3 percent range would be considered healthy for the U.S. economy. But the country is coming out the longest and deepest recession since the Great Depression. So economic growth needs to be a lot stronger — two or three times the current pace_ to make a big dent in the nation’s 9.9 percent unemployment rate. Economists say it takes about 3 percent growth to create enough jobs just to keep up with the population increase.  Growth would have to be about 5 percent for a full year just to drive the unemployment rate down 1 percentage point. After the last severe recession in the early 1980s, GDP grew at rates of 7 to 9 percent for five straight quarters and the unemployment rate dropped from 10.8 to 7.2 percent in 18 months.  The Associated Press

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CRE Lending Remains Constricted, But Loosening for Office and Retail – Overall, first quarter commercial and multifamily mortgage loan originations were 12% higher than during the same period last year. But they were 26% lower than during the fourth quarter of 2009, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily mortgage originations. The 12% overall increase in commercial/multifamily lending activity during the first quarter was driven by increases in originations for office and retail properties. When compared with the first quarter of 2009, the increase included a 98% increase in loans for retail properties, a 29% increase in loans for office properties, a 5% decrease in loans for multifamily properties, a 28% decrease in loans for industrial properties, a 46% decrease in hotel property loans, and a 68% decrease in health care property loans. Among investor types, loans for conduits for CMBS saw an increase of 657% compared to last year’s first quarter. There was also a 131% increase in loans for life insurance companies. On the downside, commercial bank portfolios saw 4% decrease in loans year-to-year, and the dollar volume of loans for Fannie Mae and Freddie Mac saw a decrease of 49%. Costar

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Fair Value Proposal Could Cost Banks – The Financial Accounting Standards Board proposed a requirement that banks use market values for loans on their books, a controversial move that could cause steep declines in the overall book value of some banks. If the rule-making panel for accounting procedures approves the change, U.S. banks would have to adjust the value of their loan portfolios to the ups and downs of the market, instead of the longstanding practice of using adjusted original cost. If the proposal is approved, it likely wouldn’t take effect before 2013, Mr. Herz said. Closely held banks with less than $1 billion in assets would have four years longer than other companies to start complying with some aspects of the rule. WSJ

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Congress Gets Mean – We’ve already reported that tax writers Sander Levin and Max Baucus plan to raise the tax rate on most “carried interest” income from 15% today to roughly 35% next year, and to about 38% in 2013. In a little-understood provision, the Levin-Baucus bill would impose a new “enterprise value” tax on the sale of part or all of any investment firm that has ever earned even $1 of carried interest income. So instead of paying the capital gains tax rate on the sale of such shares, the owners would have to pay ordinary income tax on the proceeds of the sale. This means that owners in private equity firms or real-estate trusts would be taxed twice at a rate approaching 40%—first at the time the money is earned and again at the time of the asset sale. The combined tax rate would therefore rise well above 50%. WSJ