Looks like FDIC Fridays are going to get really exciting. http://washington.bizjournals.com/washington/stories/2009/07/06/daily39.html Washington Business Journal - July 8, 2009 /washington/stories/2009/07/06/daily39.html Wednesday, July 8, 2009, 1:00am EDT | Modified: Wednesday, July 8, 2009, 3:30am Economist: FDIC gearing up for bank closures Washington Business Journal - by Janet Leiser Contributing Writer The Federal Deposit Insurance Corp. is gearing up to handle a large number of bank failures expected as a result of bad mortgages, both in residential and commercial real estate, an economist said Tuesday. âThey know theyâre going to take down a large number of banks and they canât do it until theyâre staffed up,â said Mark Dotzour, chief economist and director of research for the Real Estate Center at Texas A&M University. Dotzour expects federal regulators to establish an agency, similar to the Resolution Trust Corp. that disposed of assets belonging to insolvent S&Ls in the late 1980s and early 1990s. âOnce they start to sell [foreclosed real estate], weâll find out what the market really is,â Dotzour told attendees at an economic summit hosted by a handful of real estate groups in Tampa, Fla. Dotzour blamed federal intervention for the lack of commercial real estate investment activity in recent months, as well as the failure of businesses to make major decisions. âNobody knows what to do so theyâre doing nothing,â Dotzour said at the luncheon meeting at the Intercontinental Tampa. Government, in its quest to help the economy, is causing harm by propping up failing companies and regularly changing rules, he said. âNo one can predict what the government will do,â Dotzour said. âPeople are frozen. Itâs not that they donât want to invest in the future, the rules are unclear,â he said. He jokingly called the Federal Reserve âinkstersâ for routinely printing money to bail out big business, including banks that are still not making many loans. The governmentâs role in a capitalistic society, he said, âis to make the rules and get off the dance floor.â Businesses and individuals that canât pay their bills should resolve their problems in bankruptcy court, not with money from the government, he said. Itâs a process that has worked for decades, for generations. âEveryone has a lesson to learn here, including you and me,â he said. âWe have to live within our means.â Dotzour expects foreclosure rates to continue to climb, real estate prices to fall more and cap rates to rise to at least 9 percent before leveling off. In 2010 and 2011, interest rates will begin to rise, as will inflation. Once investors realize the market is at bottom, deals will begin to flow again, he said. In the meantime, he compared the bad loans that remain on banksâ books to a smelly cat litter box and the feds keep throwing more litter on top to mask the smell. But theyâll eventually have to remove the organic material to fix the problem. All contents of this site Â© American City Business Journals Inc. All rights reserved.