The Federal Deposit Insurance Corp. is gearing up to handle a large number of bank failures expected as a result of bad mortgages, both in residential and commercial real estate, an economist said Tuesday. “They know they’re going to take down a large number of banks and they can’t do it until they’re staffed up,” said Mark Dotzour, chief economist and director of research for the Real Estate Center at Texas A&M University.
Dotzour expects federal regulators to establish an agency, similar to the Resolution Trust Corp. that disposed of assets belonging to insolvent S&Ls in the late 1980s and early 1990s.
“Once they start to sell [foreclosed real estate], we’ll find out what the market really is,” Dotzour told attendees at an economic summit hosted by a handful of real estate groups in Tampa, Fla.
Dotzour blamed federal intervention for the lack of commercial real estate investment activity in recent months, as well as the failure of businesses to make major decisions.
“Nobody knows what to do so they’re doing nothing,” Dotzour said at the luncheon meeting at the Intercontinental Tampa.
Government, in its quest to help the economy, is causing harm by propping up failing companies and regularly changing rules, he said.
“No one can predict what the government will do,” Dotzour said.
I believe the FDIC is broke and knows it; that under the law they should have seized these three banks (and many dozens more, including some really big ones) some time ago, but doing so will force them to tap the Treasury "emergency" credit line. They're well-aware that this could instill quite a bit of panic in the public (never mind Congress!); as such they, along with OTS and OCC are conspiring to (once again) hide the truth and pray for an economic recovery before they are forced to act as the law demanded months or even years ago! Source: http://market-ticker.denninger.net/archives/1283-Is-The-FDIC-Broke-And-Covering-It-Up.html
If you read the article, you'll see there are several good sized banks that should have had the plug pulled long ago. With the FDIC gearing up it's ranks, the writing is on the wall...
* Colonial Bank: Colonial Bank has 300 branches in the states of Alabama, Georgia, Florida, Nevada and Texas. Its common stock is traded on the NYSE under the symbol CNB. Colonial's assets have grown from $166 million in 1981 to $26 billion Source: http://en.wikipedia.org/wiki/Colonial_Bank