Four short years ago (or “long” years if you are in the financial services industry) on August 17th the “sub-prime” markets crashed and began the domino effect that led to the global financial disaster of the of 2008. The anniversary date is more like a wedding anniversary than a date signifying a one-time event, like the death of Elvis, because the carnage continues. The Great Depression officially lasted 12 years so maybe I’m jumping the gun wanting to hurry up and have this problem behind me.
Over the past few weeks the American Banker headlines read:
- Investors Give Banks a Swift Kick in the Pants;
- Private equity firms and hedge funds are forcing the banks they invest in to clean up problem loans, and it's starting to show in the data;
- Buffet’s $5 Billion Lifeline Could Become B of A’s Capital Noose;
- Numerous articles regarding Banks Robo-Signing woes;
- FHFA Suing 17 of the largest U.S. banks for mortgage fraud;
- B of A is fighting major battles on multiple fronts from mortgage fraud;
- Large Banks accused of taking $6B in kickbacks from mortgage insurers;
- Lawsuits Highlight an Administration at odds on housing;
- Banks accused of fabricating foreclosure documents;
- Community banks using Small Business Loan Fund proceeds to exit TARP
And the American Banker publication is on the bank’s team. You can only imagine what the rest of the press is writing about this nation’s banks.
I was truly hoping by this point that banks would have cleared their decks of distressed balance sheet loans and we would be on to something new like the next great bubble. The FDIC recently announced that there are fewer banks in trouble in Q3 2011. I find that hard to believe since we have still not seen the great purging of distressed loans we have anticipated since 2007.
Did asset quality improve without the rest of us knowing?
Did rents and occupancy rebound on a national level while we weren’t looking?
Was there some unknown force that caused hidden massive property appreciation whereby borrowers are no longer upside down in their mortgages?
Could these same big banks that are currently being sued by AG’s offices in fifty states, the Federal government and investors of every ilk be lying about asset quality and market conditions?
Surely not.
Happy fourth anniversary indeed, unfortunately I feel confident we will see anniversary number five.
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