As we have discussed in several previous StreetWise columns, thedistressed asset pipeline, which has been clogged for nearly twoyears, is beginning to loosen up. Lenders and special servicers arefaced with thousands of distressed assets on their balance sheetsand in their portfolios, yet until recently, only a small number ofthese assets have made their way to the market.

Everything that has happened from a regulatory perspective hasprovided these entities with the ability to avoid having to makedecisions relative to these distressed assets. These regulatorychanges have included changes in the FASB market-to-marketaccounting rules, modifications to REMIC guidelines and bankregulators letting banks hold notes on their books at par eventhough they know the collateral is worth substantially less.

The Federal Reserve's highly accommodative monetary policy isallowing for the recapitalization of the banking industry which isrelieving pressure on lenders to deal with distressed assetsquickly.