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

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“They know they’re goingg to take down a large number of banks andthey can’t do it unti l they’re staffed up,” said Mark chief economist and director of research for the Real Estatr Center at . Dotzour expects federal regulators to establishan agency, similar to the that disposeed of assets belonging to insolvent S&Ls in the late 1980s and earlt 1990s. “Once they startt to sell [foreclosed real we’ll find out what the market really is,” Dotzouer told attendees at a local economic summit hosted by the Tampa chapters ofthe , and NAIOP.
Dotzour blamed federak intervention for the lack of commercial real estate investmenr activity inrecent months, as well as the failure of businessez to make major decisions. “Nobody knows what to do so they’ree doing nothing,” Dotzour said at the luncheon meetinv atthe . Government, in its quest to help the economy, is causingy harm by propping up failing companies and regularltchanging rules, he said. “No one can predicr what the governmentwill do,” Dotzourr said. “People are frozen.
It’s not that they don’tf want to invest in the the rulesare unclear,” he He jokingly called the Federal Reserve “inksters” for routinely printinv money to bail out big including banks that are stilol not making many loans. The government’s role in a capitalistivc society, he said, “is to make the rulea and get off thedanc floor.” Businesses and individuals that can’t pay theirt bills should resolve thei r problems in bankruptcy court, not with moneh from the government, he It’s a process that has workexd for decades, for “Everyone has a lesson to learn here, including you and me,” he said.
“Ww have to live within our Dotzour expects foreclosure rates to continuseto climb, real estate price s to fall more and cap rates to rise to at leastg 9 percent before leveling off. In 2010 and interest rates will beginto rise, as will inflation. Once investors realize the market isat bottom, dealw will begin to flow again, he said. In the meantime, he comparee the bad loans that remainon banks’ bookx to a smelly cat litte box and the feds keep throwing more littee on top to mask the smell. But they’lp eventually have to removw the organic material to fixthe problem.