Thursday, January 15, 2009

Bank on this one............

Some banks and S & L's, including large ones, have been closed and/or taken over as a result of faulty and defaulted real estate loans.

In an ironic twist, there is a story making news about a Florida market having to deal with buildings which once housed a prominent local bank going unused, and stuck with tax assessments and other funds owed.

This story has a scary element to it, as well as a funny one.

Personally, I see this as a management issue. Before this particular bank went belly up, maybe the matter of the buildings they owned, taxes, and the real estate obligations of the bank itself should have been dealt with. Now, this has become a blow to the local economy.

There are those who believe, as I do, that the best solution to the real estate crisis would have been for the government to specifically pay off each of the defaulted loans directly, rather than in the form of a bailout.

If local government can't handle the effects of losing a once prominent local bank, then chances are the money handed out via the "bailout" plan will be just as mismanaged by our collective elected officials.

The homeowners or loan owners that defaulted have already suffered the consequences. But if the government has "bought" those loans and owned the properties, the banks that loaned on them would have survived - and undergone immediate policy changes so this wouldn't happen again. And specific people would be responsible for wisely maintaining the continuing existence of these banks and lenders.

Ah, what might have been...........

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