Real estate market threatening Georgia banks

[Pale Blue Dot]

Source: The Atlanta Journal-Constitution

Georgia's banks have built up the nation's heaviest concentration of loans to now-struggling home builders and real estate developers.

That is putting several banks in the state — and perhaps significantly more if economic conditions deteriorate — at greater risk of failing or being pushed into takeovers by healthier banks, some people in the industry say.

Nearly $1 out of every $5 on Georgia banks' loan books bankrolled homebuilders and real estate developers — by far the highest proportion in the state in at least 30 years, according to federal regulators' data.

Even during the savings-and-loan crisis of the 1980s and 1990s, when thousands of banks and thrifts across the nation failed, Georgia banks were far less exposed to these higher-risk loans. Today, the banks have double the concentration of those loans, according to federal data on banks.

"In Atlanta, this is the worst market we've had, ever," said Walt Moeling, a lawyer with Atlanta firm Powell Goldstein who has been representing local banking firms since 1968. "Everything went splat."

Read more: http://www.ajc.com/business/content/business/stories/2008/06/28/bank_real_estate.html

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The FDIC has 90 banks on its national watch list, a number that is expected to rise.

[susu369]

1. Interesting

"Nationwide, only four banks have failed this year, and only seven since 2005."

ONLY - is this supposed to be good news?


:crazy:

[amandabeech]

3. Usually what's done is the shot-gun marriage, discussed in the article.

Regulators force banks in trouble to merge with others with sound balance sheets.

It was a technique used in the S&L crisis in the Bush I regime.

[Blue State Bandit]

6. Deja-who?

[amandabeech]

10. Exactly. n/t

[SmileyRose]

2. Most are small community banks and credit unions but

it's my understanding Suntrust and Washington Mutual are both still on the watch list.

[LeftyMom]

7. WaMu has my Dad's mortgage.

Luckily, he's just about done paying it off, if he hasn't already and didn't mention it.

[SmileyRose]

8. I'm with Countrywide

soon to be Bank of America. If Wamu fails, and I doubt they will, they'll just get eaten up by another bank who can get enough capital to cover the iffy loans Wamu has floated.

[aikoaiko]

4. Banks that made too many risky loans may have to pay the price

Capitalism has its Darwinist tendencies.

[SmileyRose]

9. The bank isn't the one that pays the price.

It's the neighborhoods left with half built strip malls, dozens of vacant homes on every street etc. A single vacant home in a neighborhood is bad enough, but get dozens of them all being broken into while the banks spend years fiddling around etc - the whole entire neighborhood detereorates. People who DIDN'T take out iffy loans, who are with good banks, they suffer to if the need arises to sell their home. - and at the very least they end up living in a downwardly mobile neighborhood. The stores leave, the schools fall apart - it's not good. The mortgage brokers still have their billions while the people living in those neighborhoods have to take a lead pipe with them to walk the kids to the bus stop so the vaigrants who are using all those vacant homes as meth or crack houses don't rape the kids.

[sbyte]

5. More good news, links to another DU econ post.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x39909

http://www.doctorhousingbubble.com/stage-two-of-the-mortgage-collapse-500-billion-in-pay-option-arms-meet-the-piper-in-2008-with-60-percent-being-in-california/