naked capitalism

SidFinster says:

Are you seriously suggesting that banks would play accounting and legal games to avoid owning up to losses and taking a capital writedown?

If so, you must be some kind of Communist!

Peripheral Visionary says:

Unfortunately, this is a depressingly pervasive issue. I recently received a notice from my bank–a small local bank, previously very conservative in its lending operations–informing customers that it was “working with” a number of real estate developers who apparently were having difficulty. “Working with”, in this case, is likely in the form of forbearances or even additional funding in the desperate hope that somehow a real estate developer saddled with huge amounts of debt and properties that can’t be sold will somehow turn around. In other words, pouring money into a hole in the ground, or sending good money after bad.

The bad news is that the commercial and development portfolios of the banks are doing poorly–but the very bad news is that they are likely blowing even more money on ill-advised attempts to mitigate the situation, which will ultimately prove to be unsuccessful and costly.

cougar_w says:

While the FED can’t bail out 1000 banks in a year, or absorb that much bad paper (er…. can it?) it doesn’t need to.

Smaller and regional banks will go bust and be sold by the FDIC to larger banks (solving two problems at the same time). The FED has, can and WILL bail out any of the larger banks up to the amount of many billions (with a B) $US, for values of “many” up to 2000, and perhaps more than that.

There is NO BOTTOM to the well of fiat dollars. They will throw numbers with 10 or 11 zeros on them at the big banks on a daily basis forever. Period.

Once the currency is properly hyperinflated into the stratosphere the debts still on the books will be easy to pay. The race right now is to get hyperinflation in time to cover the debts with wheelbarrows of cash, before any more big banks fall over.

As for hyperinflation itself that is a problem only for the middle class, which will be entirely vaporized. But the middle class can be rebuilt (or so the oligarchs will imagine) assuming TPTB decide having such a class toddling around the place offers the right ROI.

And no I’m not being even remotely sarcastic.

cougar

Hugh says:

Quelle surprise! Those above are right. Who needs reserves when you have the Fed and Treasury to bail you out. This is just more evidence that banks are and remain insolvent.

Richard Kline says:

Why should most banks _care_ about the implosion of commercial re? Most of the big banks are dead, but are supplied with a) marbles, b) guarantees, and c) the lovingkindness of regulatory forebearance well past the event horizon of fabulation and madness. Said banks of any size will be permitted by their regulators simply to ignore the losses and continue to ‘operate’ on the public’s dime. Oh yeah, small banks are toast, but the FDIC will be used to force the mid-size banks to pony up for the losses there.

Problem, problem, me no see problem? In the real world, yes, there’s a problem as the public gets stuck with those losses progressively more over the next yea years to come as a metastisizing liability on various public ledgers which no one will look at either. But in the Candyland which is Big Money USA, nah, there’s no crisis, the party’s roarin’ along. The One Party system, that is. . . . This won’t end well, but everybody on the Wall Street-Beltway axis has already decided that the chumps—i.e. the public—are gonna get stuck with the bill and the criminal complaint.