The Anna Maria Island Sun Newspaper

Vol. 9 No. 28 - April 1, 2009


We’ve been fooled by the feds

Happy April Fool’s Day! If you’re feeling like you’ve been fooled, guess what, you have. Every American has been fooled not only by Wall Street’s investment bankers, at least you can wrap your brain around that, but we’ve also been fooled by the federal government, or at least have been let down.

The Congress, Senate and the White House have all signed off on a bill giving billions of dollars to banks in an effort to get them to free up credit and start lending in order to get the economy back on course. Well, this sure doesn’t seem to have worked, since the banks still aren’t lending for reasons the government thus far hasn’t been able explain in language most of us can understand.

Last week in a further effort to infuse money into the banking system, the secretary of the Treasury came up with a plan to sell the banks’ toxic assets. This plan is actually a partnership between the federal government and private investors, with the government assuming most of the risk. The object is to sell off the bad loans, mostly mortgage debt, by packaging them into securities to be sold to investors. Pretty much the same way Wall Street packaged and sold the original mortgage debt.

The problem now is does anyone want to buy these toxic assets and do the banks even want to sell them? After the AIG debacle, the banks have substantially less incentive to cooperate with the government. Why should they participate in sweeping government rescue programs at the risk of being criticized, embarrassed and threatened by the Congress of the United States and private citizens? Better to keep a low profile, their assets in house and money in their vaults.

Instead of working on developing a functioning banking system, the Congress was showboating for cable news demanding that Wall Street bonuses be paid back, the same bonuses that were in the bill they signed, but apparently didn’t read. Ironically, both the president and the Treasury Department have branded Wall Street with a scarlet letter and are now looking to the same masters of the universe to help them offload the toxic assets.

What affect does this have on the real estate market and the economy as a whole? More than you may want to know. The ability to get financing for purchasing property is the very core of the real estate market. True there are some buyers around with cash in hand, but the vast majority of real estate transactions are lender financed.

And even though there is some residential financing available for primary and second homes, the requirements are higher than in previous years with at least 20 percent down and platinum credit scores. Investors, who own many properties on Anna Maria, will find an even higher criteria is required. All of this is making it more difficult to put a dent in our pent up real estate inventory.

And what a crime that at the same time real estate values are at an all time low, the banking system is frozen. There are plenty of buyers who would like to buy well-priced properties, and there are plenty of sellers who for financial or lifestyle reasons really need to sell, but we’re not getting them together. It seems that everyone’s life is being put on hold while we stumble along trying to find the light at the end of the tunnel.

This economy is not coming back until the real estate market comes back and takes along with it all of the fringe businesses that benefit from people buying and selling homes. So instead of standing up and demonizing individuals who work for corporations receiving bail out money, Congress, and especially the big brains at the Treasury Department, should be buckling down and finding a real path out of this crisis. We may have been fooled, but the real fools are inside the Beltway.

Real Estate Transactions
Closed sales between Jan. 5 and 31, 2009

Anna Maria

425 Pine Ave.         Cmm’l          $615,000
154 Crescent          SF          380,000
267 Gladiolus          SF          350,000

Bradenton Beach

2307 Ave. C         Duplex          $505,000
2412 Ave. A          SF          350,000
1103 Gulf Dr. S.         SF         302,500
1801 Gulf Dr. N. #137          Condo         225,000
2601 Gulf Dr. N. #226         Mobile          83,300


4126 Osprey Harbour Loop         SF         $250,000

Holmes Beach

101 47th St.         SF          $1,500,000
106 36th St.         Condo          1,137,500
105 81st St.         Duplex         615,000
6826 Gulf Dr.         Condo         480,000
6301 Holmes Blvd. #A          Condo         410,000
5608 Gulf         Dr. #102          Condo 289,000
3016 Ave. E         Duplex         300,000
6300 Flotilla Dr. #73         Condo         159,000


Source: Manatee County Property Appraiser’s Office

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