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Homebuilders: Banks Too Tightfisted With Bailout Cash

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By CATHERINE DOLINSKI | The Tampa Tribune

Published: November 24, 2008

TALLAHASSEE - The record profit Florida's homebuilders made during the boom years has given way to massive problems with cash flow and credit that builders in a news conference today blamed on banks hoarding billions of federal bailout dollars.

The banks aren't accepting the blame, pointing instead to a glutted housing market that makes construction anything but a safe investment right now.

In October, the building industry shed 80,000 jobs in Florida alone – and unless something changes, that's only the beginning, said Jay Carlson, president of the Florida Home Builders Association.

The federal government authorized a $700-billion bailout package in October to rescue the country's financial institutions. The bailout presumably would thaw the credit market and get the economy moving.

Banks continue to eliminate credit lines for homebuilders and even are calling in loans that are not in default, Carlson said. Builders with good credit ratings are finding it difficult or impossible to complete projects.

"The current method banks are using to recapitalize is exacerbating Florida's economic problems," Carlson said. "Despite the borrower being solvent and making payments on their construction loans, the cash call is impairing what were previously good loans and forcing builders into insolvency."

All of which, he said, will serve to boost unemployment and foreclosures and harm industries dependent on the real estate business.

Alex Sanchez, president of the Florida Bankers Association, counseled patience. Of the 9,000 banks across the country, about 170 have received bailout money, he said. "The government doesn't move that fast."

Sanchez also said that while he respects the builders, he does not think they grasp the intense pressure and scrutiny on banks from state and federal regulators, now more than ever.

"Even if a bank wanted to make loans -- with the inventory we have in Florida, meaning we have a huge inventory of homes for sale – even if banks wanted to build more homes, the regulators would crucify that bank because it would not be a prudent loan," Sanchez said.

He added that banks are making plenty of home loans – to consumers buying up the housing inventory. He claimed that many builders are getting financing as well but that home construction is a tougher sell right now.

Reporter Catherine Dolinski can be reached at (850) 222-8382 or cdolinski@tampatrib.com.

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