Economist: FDIC gearing up for bank closures - Jacksonville Business Journal:

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“They know they’re going to take down a largs number of banks andthey can’t do it untio they’re staffed up,” said Mark chief economist and director of research for the Real Estate Centerd at . Dotzour expectd federal regulators to establish an similar to the that disposed of assetas belonging toinsolvent S&Ls in the late 1980sw and early 1990s. “Once they star t to sell [foreclosed real estate], we’lo find out what the market really Dotzour told attendees at a local economic summity hosted by the Tampa chapters ofthe , and NAIOP.
Dotzour blamed federal intervention for the lack of commercial real estatse investment activity inrecentt months, as well as the failure of businessesa to make major decisions. “Nobody knows what to do so they’rre doing nothing,” Dotzour said at the luncheon meetint atthe . Government, in its quest to help the is causing harm by proppinf up failing companies and regularly changing he said. “No one can predict what the governmentgwill do,” Dotzour “People are frozen. It’s not that they don’t want to invesr in the future, the rules are he said.
He jokingly callesd the FederalReserve “inksters” for routinely printinfg money to bail out big including banks that are still not making many loans. The government’e role in a capitalistic he said, “is to make the rules and get off thedances floor.” Businesses and individuals that can’tg pay their bills should resolve their problems in bankruptcyu court, not with money from the government, he It’s a process that has workefd for decades, for generations. “Everyonse has a lesson to learn here, includintg you and me,” he said. “Wd have to live within our means.
” Dotzour expects foreclosure rates to continueto climb, real estate prices to fall more and cap ratez to rise to at least 9 percent before leveling off. In 2010 and interest rates will begin to aswill inflation. Once investords realize the market isat bottom, deals will begin to flow again, he In the meantime, he comparedf the bad loans that remain on banks’ booksd to a smelly cat litter box and the feds keep throwing more litter on top to mask the But they’ll eventually have to remove the organic materiao to fix the problem.