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Willy Walker Fears The Potential Impacts Of Faster GDP Growth, Remains Optimistic About Tax Reform

While many have lamented the 2% growth of the U.S. economy since the last recession and hope the Trump administration can help boost GDP growth to around 4%, Walker & Dunlop CEO Willy Walker says that may not be such a good idea. 

Walker & Dunlop CEO Willy Walker

"My big fear is that the Trump administration gooses the economy and we’re looking at 4% or 5% growth in 2018 and 2019," Walker told Bisnow. "If you get that growth you will get overdevelopment, you will get people doing stupid things and you will have problems."  

Walker said the economy's slow bounce back from the Great Recession has been a good thing, because it didn't create the type of bubble in the real estate sector that contributed to the financial crisis.  

While he is content with the economy's growth rate, Walker said there are policy changes Republicans can make that will greatly benefit the real estate sector, starting with corporate tax reform.


The CEO said he met recently with House Speaker Paul Ryan, whom we snapped at a gala in March, and left the meeting extremely confident in the likelihood of tax reform.

"On the corporate side, his sentiment was whether it's 20%, which the caucus wants, or 15%, which Trump has called for, with the president-elect they are going to get rates coming down," Walker said. "I would put a lot of money on that." 

Beyond lowering rates, Walker said he is less sure about the specifics of what tax reform will look like and said issues like carried interest will have a big impact on commercial real estate.

While Trump has spent his career in real estate, Walker noted he has largely self-financed and hasn't had to raise capital from private equity, and thus doesn't support carried interest like most in the industry, and the Republican Party, do. 

"The president-elect does not have a great love for carried interest," Walker said. "He's been straightforward in saying he doesn't think it should exist."

EagleBank CEO Ron Paul at a 2016 Bisnow event

As the head of one of the nation's largest commercial real estate lenders, Walker looks at potential economic policy changes from a macro perspective, but smaller, local bankers, like EagleBank's Ron Paul, see ways that financial reform could benefit their companies.

Paul is closely watching which provisions of the Dodd-Frank Act the Republicans choose to repeal. Under the law, banks are regulated much more closely when they reach the $10B threshold, which Paul would very much like to see changed.

"We're growing at 15% a year, so at $7B, we're not far from being under that microscope," Paul told Bisnow. "For us, that will be a big issue, and it would give us a significant amount of comfort to know that we can grow organically because we do believe that $10B threshold number will disappear." 

As the head of one of the DC area's largest CRE lenders, Paul is also keeping a close eye on the GSA's decision of where to locate the new FBI HQ. One of Trump's colleagues, NYC developer Don Peebles, met with the president-elect last month and told Bisnow last week he believes the decision will make it to Trump's desk

Walker, Paul and Peebles will all discuss these topics at Bisnow's Economic and Political Forecast event on Thursday at the Watergate Hotel.