Big Banks vampirism in decline


As reported numerous times before, when larger banks seek to control the flow of money they often buy out those smaller than them, change the way that they work, suck out all of the life from them then move on as some large mass of incivility.  Charles Abbott of Reuters News wrote and article titled U.S. closes banks in Georgia and Washington State where he reports that “U.S. authorities closed two small banks in west-central Georgia and one in Washington State on Friday, bringing the number of foreclosures in 2011 to 43.  FDIC Chairman Sheila Bair has said the agency expects the number of failures to fall in 2011.  CertusBank, a subsidiary of Blue Ridge Holdings Inc, bought the Georgia banks. Blue Ridge is led by former Bank of America Corp and Wachovia Corp executives who want to build a regional bank in the U.S. Southeast.  Regulators also closed Summit Bank, of Burlington, Washington, about 50 miles north of Seattle. 

The article says that “community banks are struggling with the weak economy and many are facing problems related to their exposure to the commercial real estate market” but I have my doubts about that.  I think that community banks are struggling because they did not receive the bailout given to larger institutions nor do they have some of the favorable conditions to lend to those actually affected within their community.  The “real” cash lost on these deals is no where close to the loss reflected on their financial statements and everyone involved knows this.  The “real” cash can be easily recouped by looking at this situation in the long-term vice the short one.  Allowing those properties to be sold via land contracts vice regular mortgages, allows smaller businesses to expand and grow without major obstacles.  It puts that assets back into viability instead of allowing it to die a slow and neighborhood slaughtering death.  It saves neighborhoods and communities because instead of having a block of abandoned buildings you have manufacturing activity.

Big banks devouring of the smaller ones are in decline but the fact that this is allowed to happen at all makes me wonder why we continue to do the same thing every single time and have the audacity to expect a different outcome.

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