LOS ANGELES—Increased banking regulations could potentiallyincrease market competition, particularly for private and balancesheet lenders. When banks are required to hold higher capitalratios, these other lenders have more room to compete in themarket. We sat down with Calmwater Capitalportfolio manager Larry Grantham to exclusivelytalk about the impact banking regulations have on the industry.During the conversation, Grantham also gives us insight into thecompany's unique investment strategy, which is on track todeploy $500 million in capital this year—an impressivefeat considering the company just spun out from under the wing ofKarlin Real Estate. Here, Grantham talks aboutbanking regulations, his investment strategy and why the cheapestcapital isn't always the key to success.

GlobeSt.com: Do you think that banks will be more orless regulated in the next few years?

Larry Grantham: I am always careful toopine (even more careful with allocating capital) on which way ourlenders in Washington will sway, but I think given the public andpolitical vitriol that banks will continue to face increasingregulation. Banks and Wall Street in general continue to be easytargets for politicians.