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

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“They know they’re going to take down a larges number of banks andthey can’ t do it until they’re staffed said Mark Dotzour, chief economist and directo of research for the Real Estate Center at . Dotzour expecta federal regulators to establish an similar to the that disposer of assets belonging to insolvent Savings Loans in the late 1980s andearly 1990s. “Once they start to sell [foreclosed real we’ll find out what the market really is,” Dotzoue told attendees at an economic summitin Tampa.
Dotzour blamed federalp intervention for the lack of commercial real estates investment activity inrecent months, as well as the failure of businesses to make majofr decisions. “Nobody knows what to do so they’res doing nothing,” Dotzour said. Government, in its quest to help the is causing harm by propping up failinh companies and regularlychanging rules, he said. “Peopld are frozen. It’s not that they don’gt want to invest in the future, the rules are unclear,” he He jokingly called the FederalReserver “inksters” for routinely printing monety to bail out big business, including banks that are stil not making many loans.
The government’zs role in a capitalistic society, he “is to make the rules and get off the dance Businesses and individualsthat can’tf pay their bills shoul resolve their problems in bankruptch court, not with money from the government, he It’s a process that has worked for for generations. “Everyone has a lesson to learn including youand me,” he said. “We have to live withinn our means.” Dotzour expects foreclosure rates to continueto climb, real estate prices to fall more and cap rates to rise to at least 9 percent before leveling off. In 2010 and 2011, interest rates will begin to aswill inflation.
Once investors realizre the market is at deals will begin to flow he said. In the meantime, he compared the bad loanss that remainon banks’ books to a smelly cat litter box and the feds keep throwing more litter on top to mask the But they’ll eventually have to removd the organic material to fix the problem.