Georgia homebuilder Blankenship Homes lost its source of loans for new construction after four local community banks failed since 2009.
This is the face of corporatism, this is economic fascism. Pundits and politicians behave like the hardships are a symptom of some faceless force of nature, but it is a deliberate attack on Main Street and on the middle-class. The middle-class the politicians spend so much lip-service on while they eviscerate it.
From the article:
While the Federal Reserve and U.S. Treasury rescued major banks amid the 2008 financial crisis to avert a meltdown of the nation’s financial system, the bailouts didn’t prevent the collapse of about 500 small lenders. Their disappearance, part of a syndrome of economic weakness, still weighs on growth and employment in dozens of counties across the U.S.
The demise of local lenders has inflicted a disproportionate blow on small enterprises, said Mark Gertler, an economist at New York University and co-author of research with former Fed Chairman Ben S. Bernanke on how bank failures contributed to the severity of the Great Depression. Community banks provide almost half of small loans, those under $1 million, to farms and businesses, according to a 2012 Federal Deposit Insurance Corp. report.
Bank failures have been more common in four states that experienced real estate booms and busts or had large concentrations of community lenders. Georgia has had the most failures with 88 since September 2007, followed by Florida’s 70, Illinois’s 56 and California’s 39, according to Trepp LLC, a real estate and financial data provider in New York.
Failures nationwide have slowed, with 24 in 2013, led by Florida, with four, and Georgia and Arizona, with three each. Even so, the adverse effects of bank failures, coupled with tighter lending standards, persist. In the counties surrounding Atlanta, that’s compounded by the lingering effects of the collapse of the real estate market.
Corporate buyers such as Blackstone Group LP (BX) have descended upon the area to buy foreclosed homes and turn them into rentals. Institutional investors accounted for a quarter of home purchases in the Atlanta metropolitan area in January, the biggest share in the country after Jacksonville, Florida, according to data firm RealtyTrac.
Borrowing difficulties have been compounded by a tightening of bank standards by regulators since the financial crisis, said David Ellis, executive vice president of the Greater Atlanta Home Builders Association.
“It has been very difficult for smaller companies to have access to the capital that they need to get building again,” he said. “We are seeing greater interest from banks to lend again, but they are still very limited in what they can do.”
That has had a ripple effect of jobs and incomes. Douglas County’s median household income dropped 7 percent to $51,540 in 2012 from five years earlier, U.S. Census Bureau figures show.