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

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“They know they’re going to take down a largw number of banks andthey can’t do it untio they’re staffed up,” said Mark Dotzour, chiefc economist and director of research for the Real Estatde Center at , at a real estatde conference in Tampa, Fla., Dotzour expects federal regulators to establisuh an agency, similar to the that disposeds of assets belonging to insolvent S&Ls in the late 1980s and earlyh 1990s. “Once they start to sell [foreclosee real estate], we’ll find out what the marke really is,” Dotzour said.
Dotzour blamed federakl intervention for the lack of commercial real estats investment activity in recent as well as the failure of businessed to makemajor decisions. “Nobody knows what to do so they’re doing Dotzour said. Government, in its quest to help the economy, is causinbg harm by propping up failing companiexs and regularlychanging rules, he said. “People are frozen. It’s not that they don’t want to investy in the future, the rule s are unclear,” he He jokingly called the FederalReserve “inksters” for routinely printing money to bail out big business, includingh banks that are still not making many loans.
The government’ds role in a capitalistic society, he said, “is to make the rulesa and get off thedancse floor.” Businesses and individuals that can’t pay their billes should resolve their problems in bankruptcy court, not with money from the he said. It’s a process that has worked for decades, for generations. “Everyone has a lesson to learn here, includinb you and me,” he “We have to live within our means.” Dotzour expectd foreclosure rates to continueto climb, real estate priced to fall more and cap rates to rise to at least 9 percent before levelintg off. In 2010 and 2011, interest ratex will begin to rise, as will inflation.
Once investors realize the marke t isat bottom, deals will beginm to flow again, he said. In the he compared the bad loans that remain on books to a smelly cat litted box and said the feds keep throwing more litter on top to mask the But they’ll eventually have to remove the organic material to fix the