business days in 2008

Seven more banks were closed last Friday (10/23/09) as the flood of bank failures this year reached 106, the most in any year since 181 collapsed in all of 1992, in the last financial melt down. Interestingly, this situation is creating one of the best work at home businesses of our times. Keep reading to find out how.

Small and mid-sized banks hold many of these loans and have been wounded more than big banks by the sinking commercial real estate market.

The FDIC is shutting down banks gradually – partly to avoid anxiety and partly because finding buyers for bad banks is tough. Bank failures have cost the FDIC about $25 billion this year and are expected to cost $100 billion before it’s over.

Compared to the last financial melt down during the savings and loan crisis, this cycle of bank failures has played out very differently. First, the raw numbers of failed banks is lower in this cycle but the asset sizes are much larger and the losses in bad debt are a significantly larger percentage of assets (about 25% in this cycle compared to 11% in the previous cycle).

So far, the bulk of the failed banks have been dealt with by the FDIC selling the entire bank to another bank (a merger, so to speak). In a merger by sale, the FDIC never takes ownership of the assets but merely pays the acquiring bank to take the bad assets since that is the less costly way to deal with the problem.

So, again you’re curious, why is this good for you and me? Answer: The Legacy loan program, known as PPIP.

In July of this year, the US Treasury confirmed the roll out of the Legacy Securities Public-Private Investment Program (PPIP). Under this program, the Treasury Dept will invest up to $30 billion of equity and debt to compliment funds established through private sector fund managers and private investors for the justification of purchasing “legacy” real estate backed securities; in other words, the bad debt from closed banks.

The good news is that individual investors are being presented with a very exclusive opportunity – one that will be short lived. That opportunity is to partner with eligible fund managers who are getting matching funds from the US Treasury to leverage their investment dollars. In other words, these are sound investments with potentially huge ROI. Through investor partnership programs, such as one offered by self-made Billionaire entrepreneur, Bill Bartmann, even smaller investors can capitalize on this exclusive situation.

The Extraordinary Volume of Charged Off Credit Cards

Perchance the greatest investment opportunity lies in the current extraordinary volume of charged-off credit cards. The smaller banks that “issue” credit cards in truth do it through the large banks and the small bank never owns the debt.

That number had been relatively steady for more than 10 years and should pretty much represent the industry capacity. At this point the industry is stretched to the limit and the banks are beginning to glut the network third party agencies. In 2009, the volume of credit card charge-offs is projected to be $105 billion, a 230% increase in 3 years!

It’s this extraordinary volume that makes the possibility so large as the existing industry can in no way accommodate this volume. Thus, new investors have the opportunity to acquire loans at very attractive prices. In early 2008, prices for fresh charged-off credit cards would have been 10 to 12 cents on the dollar. Today the price is around 5 cents on the dollar.

Unemployment is high. All those factors impact the ability to collect and recover on charged-off assets.

About the Author:

Dave Stech is CEO of Purpose Built Investments™. Prior to PBI, Dave early-retired three times as CEO/President of early-stage technology companies. Before that, he served in senior management with Kodak, where his teams launched the first disposable camera and the first digital postcard.

Dave recently interviewed self-made Billionaire entrepreneur, Bill Bartmann, who became the 25th richest person in America during the last economic implosion, and is now teaching everyday investors

Article Source: ArticlesBase.com – Top Work At Home Businesses

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