Omaha Public Radio News
Mon September 8, 2008
Attorney says subprime loans, foreclosures partly to blame for bank failures
By Katie Knapp
Omaha, NE – An attorney specializing in bank acquisitions says it was loans for construction of new homes, and not subprime loans made to homeowners, that led to bank failures.
Bob Monroe is an attorney with Stinson Morrison Hecker. He says banks made about 11 percent of the subprime loans. When those loans came due, many homeowners found they couldn't pay, which led to foreclosures. Monroe says those bad loans were packaged by Wall Street and sold to investors, which hurt the economy.
Monroe says banks made loans for development and construction of new homes. When homeowners couldn't pay the mortgages on those properties, it meant developers couldn't pay their loans, either. He says that forced banks to write off debt, and caused some to fail.
Monroe expects more banks will step in and acquire the assets of smaller operations that are facing failure. He represented Mutual of Omaha Bank in its acquisition of banks in California, Nevada and Arizona.