How Americans Can Plan to Be Screwed Tomorrow
If today’s economy wasn’t already bad enough and the need to bail out entire countries rather than just banks didn’t strike enough fear into your heart,
Jul 31, 2020231.5K Shares3.2M Views
If today’s economy wasn’t already bad enoughand the need to bail out entire countries rather than just banks didn’t strike enough fear into your heart, Congressional Oversight Panel chair Elizabeth Warren has some news for you: It’s about to get worse.
The home mortgage crisis might be more or less “over” — unless you’ve already lost your home or, like the vast majority of applicants, been denied entry into Obama’s vaunted mortgage modification program — but Warren’s panel says there’s a new one about to begin. There are $1.4 trillion in commercial real estate loans that need to be refinanced between 2011 and 2014 and, like many homeowners before them, commercial property owners took out mortgages on expensive property, only to watch prices drop.
If, like too many homeowners before them, the commercial real estate owners default on their loans, Warren thinks the whole, nasty financial crisis cycle could well start up again.
“„When commercial properties fail, it creates a downward spiral of economic contraction: job losses; deteriorating store fronts, office buildings and apartments; and the failure of the banks serving those communities.
Unlike the home mortgage crisis, however, the banks serving those communities aren’t large, out-of-state Wall Street giants: they’re quite often local community banks. Those banks are a cornerstone of Obama’s strategyto ease credit restrictions to allow businesses to hire more people and to help individuals stay in their homes. They are also the cornerstone of Arianna Huffington’s “Move Your Money” campaignto encourage people and state and local governments to transfer their money to smaller, local banks in an effort to benefit local economies.
Warren suggests that, despite the political improbability of another round of bailouts, some banks might need to be bailed out or will simply fail. No wonder Sheila Bair and the FDIC made sure their bookswere back in the black before the start of 2010.
Rhyley Carney
Reviewer
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