Small Banks Pay for Big Bank Excess
McClatchy reports that small banks are failing at an alarming rate: 155 so far this year. And the banking system is so unstable that the FDIC, which tries to place the assets of failed banks with solvent banks, can't find enough solvent banks. It has changed its rules to allow private equity funds to buy up the remains of bank failures.
Does this bother you? It should. When there aren't enough solvent banks to support the system, we're in trouble. And, according to McClatchy, it's going to get worse: delinquencies on commercial loans are rising. (As a side note, Polizeros has been warning about the commercial credit crisis for months. Now it's here.)
But after bailing out the "too-big-to-fail" banks last year, and receiving a lot of criticism for rewarding those who caused this mess, Congress won't be writing any more bailout checks in the near future. Besides, the small banks may not have caused this meltdown, but they also don't make huge campaign contributions.
last figure I heard, 1 trillion in commercial property loans are expected to bust in the next year.
Hopefully most of these are on office buildings and shopping malls too large for small banks to have had a piece of. I hear Thomas Friedman's In-Laws are out 3 billion dollars in failed commercial shopping malls. that explains his zest for free trade: need cheaper merchandise to keep the mega malls going.
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There's certainly a link between consumerism and urban sprawl. Local businesses more often use existing structures-- or (gasp) work out of their homes.
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