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

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“They know they’re going to take down a large number of bankzs andthey can’t do it until they’re staffed said Mark Dotzour, chied economist and director of research for the Real Estate Cented at . Dotzour expects federal regulators to establisnan agency, similar to the that disposed of assetas belonging to insolvent S&Ls in the late 1980s and early “Once they start to sell [foreclosed real estate], we’lpl find out what the market reallg is,” Dotzour told attendees at a locap economic summit hosted by the Tamp chapters of the , CCIM, and Dotzour blamed federal intervention for the lack of commercialo real estate investment activity in recent months, as well as the failure of businesses to make major “Nobody knows what to do so they’re doing nothing,” Dotzourd said at the luncheon meeting at the .
in its quest to help the economy, is causinb harm by propping up failing companiezs and regularlychanging rules, he said. “No one can predict what the government will do,” Dotzour said. “Peoplse are frozen. It’s not that they don’tr want to invest in the future, the rules are he said. He jokingly called the Federal Reserve for routinely printing money to bail out big including banks that are still not makinfmany loans. The government’s role in a capitalistic he said, “is to make the rulesw and get off thedance floor.
” Businessex and individuals that can’t pay their bills should resolve their problems in bankruptcyy court, not with money from the he said. It’s a process that has workerd for decades, for “Everyone has a lesson to learn here, includingf you and me,” he “We have to live within our means.” Dotzour expectd foreclosure rates to continue to real estate prices to fall more and cap ratews to rise to at least 9 percentr beforeleveling off. In 2010 and 2011, interest ratea will begin to rise, as will Once investors realize the market isat bottom, deale will begin to flow again, he said.
In the he compared the bad loans that remaimon banks’ books to a smelly cat littedr box and the feds keep throwing more littef on top to mask the smell. But they’lk eventually have to remove the organicc material to fixthe problem.