BTW, aren't banks STILL allowed to mark their real estate holdings at cost instead of marking them to market? That makes no sense at all unless you're propping up bank valuations artificially. Corrupt to the core methinks.
Not really. I work in the lending function in a bank. GAAP accounting rules apply. When a property is foreclosed, it has to be appraised and booked at current market value less cost to sell. Any time there is a market factor or event affecting the value of the real estate, it should be re-appraised. It cannot be written up, but if the value is less, it must be written down.
There is a huge divide in the banking industry between the giants like Citi, Wells Fargo, JP Morgan Chase and the community banks, which is where I am. The big banks caused the lion’s share of the problems that was exacerbated in the 2008 bank liquidity crises, which I think was purposefully triggered right before the 2008 election. The big boys were propped up, but Dodd-Frank did NOTHING to break up the huge banks in order to reduce huge economic risk from concentration of assets. . . the big ones got even bigger with the collapse of Lehman, WAMU, Wachovia, et al.
They used it as an excuse to put ridiculously heavy regulation (it was bad before) on banks. Most of these regs did nothing to truly help the consumer, it pretty much added big dollars to the cost of doing business with a bank and subjected banks to more government imposed regulatory risk.
Big banks can deal with the regulation much easier than community banks. They can afford the staffing and legal help to cope. Community banks are struggling to cope and it is forcing further consolidation of the banking industry, forcing many smaller banks out of business. I personally believe that the government is forcing change in accounting rules on the accounting industry in an attempt to damage small banks and businesses in general. The big banks are playing footsie with the Feds. Occasonal fines are chump change to them and are for show. Corzine probably stole a $ billion and is walking around a free man.
Government and the accounting industry has teamed up to create a very costly and risky business environment for small businesses and small banks alike. Joe Six-Pack on the street doesn’t have a clue that this is happening, but it will cost him the most. Access to credit for the little guy is getting harder to obtain and more costly when he gets it.
I promise you. Our government is waging war on its citizens in every way imaginable.