Subject: File No. S7-35-11
From: John J. McCauley
Affiliation: President, McCauley Investment Services

October 5, 2011

Excess Leverage in NYSE Listed mREITs is quite similar to listing of a publically traded leveraged mortgage hedge fund.

It is my experience that many "elderly investors", seeking higher income, are investing in these mREITs without fully understanding the potential collapse that a deep recession could provide when more "loans" may be subject to default.

These excessively leveraged investments should only be allowed to "Sophisticated Investors" and not allowed as NYSE listed securities for sale to the general public.

If these mREITS are accessing capital from the banking system, loan losses could once again accelerate as the leveraged loans are potentially defaulted against on a 4, 5, or even 6 to one ratio.

This is a "rebirth" of what Mr. Greenspan in the early 2000s referred to as the "Shadow Banking" industry which escaped oversight and was in part responsible for the "real estate bubble" and the "financial crisis" of 2008 for which the world continues to suffer.

Let's close the 'hole in the fence" before hundreds of billions of "unsophisticated investor capital which includes pension and retirement plans" flows into this highly leveraged mREITs and prevent this mREITs "Shadow Banking" industry from creating another financial crisis somewhere in the future when the next "deep recession" accelerates loan losses.

If they are going to be NYSE listed they should be subject to the same restrictions that "Leveraged Closed End Funds" are under with the Investment Advisor Act of 1940.