November 17, 2009
Sheila Bair, de facto real estate magnate?
As the mortgage market imploded over the past few years, the head of the Federal Deposit Insurance Corporation has watched as her agency became the owner of thousands of soured real estate properties, the Wall Street Journal reports this morning. In total, the FDIC currently owns $1.8 billion real estate, the WSJ notes.
Though the WSJ focuses on the agonizing process of unloading an Atlanta housing development named Dresden Heights -- located next to a Waffle House and a Motel 6, apparently -- the massive role the government is playing in propping up the housing market has come under increasing scrutiny of late.
The financial crisis and the real estate downturn have become linked in a vicious cycle. It goes something like this: borrowers default on their mortgages, banks holding mortgage assets fail, and, in bailing out the failed banks, the government is left owning thousands of shoddy real estate properties.
A quick scan of the some of the properties the FDIC is currently trying to unload, via the agencies website, reveals part of the problem. The agency is selling vastly different properties in very different markets (everything from a $1,800 single-family home in Detroit, and a $1 million property outside of Sacramento).
