04.14
Not wanting their ledgers to appear too heavily laden with toxic assets to the wrong people – namely investors, banks are holding significant quantities of repossessed homes off the market, feeling they would be unable to sell them and that prices would fall further. This is the claim of a fascinating article from the SF Examiner.
Discussions with my free market friends always turn to horror when I advocate a firm approach to the federal government regulating and acquiring insolvent banks, yet it appears obvious to me for just this reason. Assets should not be hidden, as private entities will do. Nationalized, the banks will be forced – and WE will be forced, as consumers – to deal with the excessive inventory. Prices can only equalize when the total availability is known.
By hiding the availability, banks are attempting to control prices in the marketplace, which is neither capitalistic or free. Better that the market truly find equalibrium through disclosure. And only regulation and transparency can achieve that.
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