Florida and the Banks

Sep. 9th, 2017 10:53 am
malada: bass guitar (Default)
[personal profile] malada
I haven't been posting much because y'all have been doing a fine job without my help.

However, with Houston still draining and hurricane Irma getting ready to scrub Florida clean of humanity, I want to mention something I read months ago - how the banks are going to react to the next - now latest - disaster.

Although the banking community gets lots of Slack from the government - all branches really - they will be seriously impacted by the latest disasters. Lax regulations has allowed development of houses and businesses ill prepared to survive a major storm. Add the possible increase of frequency of storms, higher tides and storm surges do to rising sea levels* and Florida starts to resemble a place only good for a houseboat.

Bankers are by nature conservative people. Do you think they're going to gamble on handing out 30 year mortgages on houses that may be *totally destroyed* within that time period? Oh sure, most will go begging to Uncle Sam for relief and possibly rebuild in the same area... but will the banks be willing to continue risking the long term loans where the returns look increasingly sketchy?

Maybe Florida will survive this storm but I expect many places will be wiped out. The equity in their homes and businesses will be gone. They declare bankruptcy and move on, leaving the banks with piles of rubble - in the case of businesses some of them toxic piles of rubble**.

The article I read... I'm sorry, I don't remember where I saw it... suggested that some time soon banks will no longer hand out 30 year mortgages. They may be stuck with what they already have but *new* construction? Forget it!

When cheap, long term mortgages dry up it will be a shock to the hot and relatively unregulated building community. This will be the real wake up call for Florida and other low lying areas that unregulated building is going to get risky. The Great Florida Boom will... as it has before... end. This isn't the first time there was a land boom in Florida that got deflated by economic or natural disasters.

I could be wrong. Uncle Sam may continue to bail out those *stupid* enough to build on a swamp again and again and again, or the banks could continue with handing out the 30 year mortgages - they'll just find some way to dump them onto shell corporations so when the *next* storm blows through they'll they won't be stuck with rubble piles.

In the meantime, I just hope that those caught in the storm's path can escape and the damage will be light.

*global warming will only make the naturally occurring disasters worse. If you're surrounded by semi-tropical waters expect hurricanes

**not to mention the native alligators and the non-native boas and pythons. Giant snakes. Eep.


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