October 23, 2009

BEN BERNANKE left holding the bag? “Crossroads Mall is a good example of how the Fed can (and will) be left holding the bag for hundreds of commercial property investments that it acquired via last year’s massive bank bailouts. You can bet that a significant percentage of these properties are either blighted, redundant (as will be the case in areas like Phoenix and Vegas and Miami, where commercial property growth far outpaced the local economy, even during the boom years) or poor cash flow producers. To put it another way, the Fed ultimately wound up with them because private investors took a look and said ‘no thanks.'”

Related: FDIC Failed to Limit Commercial Real-Estate Loans, Reports Show. “The Federal Deposit Insurance Corp. failed to enforce its own guidelines to rein in excessive commercial real estate lending by at least 20 banks that later collapsed, reports by the agency’s watchdog show.”

Remember, they’re telling us that more of the same will keep this from happening again . . . .

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