Sunday, October 15, 2006

Amboy Bank Should Not Have Been Surprised

If Amboy Bank was surprised, then they really should not be collecting deposits and loaning out other people's money. Real estate prices have been completly detatched from fundamentals since at least 20o4 and there has been plenty of warnings since early 2005 that people and developers were eventually going to have problems making loan payments.


From today's Asbury Park Press


"When Kara Homes filed for bankruptcy this month, Amboy National Bank of Old Bridge was listed as the largest creditor with $58.2 million in loans.

When local real estate mogul Solomon Dwek's $400 million empire was frozen by a judge following charges of bank fraud, Amboy was again the largest creditor — for $49.7 million.

Just as Amboy has been surprised by the loans gone bad, a real estate market in decline could spell financial trouble for other local banks and thrifts that have lent heavily for housing developments and commercial real estate, bank analysts and federal regulators say."

Full article...

6 Comments:

Anonymous Anonymous said...

why is it that Main stream media didn`t talk about this ?

MONEY WORRIES: Could Kara filing, Dwek case herald financial meltdown?

Alarm bells ringing

Wobbling real estate market sparks fears of banking implosion

Posted by the Asbury Park Press on 10/15/06
BY JASON METHOD
STAFF WRITER

Sunday, October 15, 2006 11:47:00 AM  
Anonymous Anonymous said...

WHY IS THAT NO ONE CAN FIND OUT WHEN PEOPLE WILL GET THEIR HOUSES OR THEIR MONEY????

Sunday, October 15, 2006 12:40:00 PM  
Blogger SCProfessor said...

Anon asked:
WHY IS THAT NO ONE CAN FIND OUT WHEN PEOPLE WILL GET THEIR HOUSES OR THEIR MONEY????

Suggested answer:

Well, things don't proceed in a Chapter 11 proceeding very fast. I suspect that KARA is currently negotiating with the construction lenders to ascertain what course of action will be taken. Having been involved in these sort of proceedings in the past you can anticipate that things will move at a slow speed. I suspect that there is currently a low level of trust from the banks and they will be very, very careful in doing their analysis given that the regulators are probably looking over their shoulders.

As to monetary deposits purchasers may have given KARA, I see nothing that convinces me that they were treated as deposits and held in a separate trust account. I hope that is the case, but based upon my past experiences I have my doubts.

I guess what I'm saying is if you are expecting a quick resolution of issues, you will be disappointed.

Sunday, October 15, 2006 2:03:00 PM  
Anonymous Anonymous said...

Good answer. The gears of the bankruptcy court tend to spin very slowly. Also bear in mind that even in the best of times, KH recordkeeping was, uh, spotty at best. "Chinese Fire Drill" comes to mind. That is no exaggeration (in fact it's putting it kindly).

Zudi has been quoted by the mayor of Mt. Arlington as saying construction up there will resume within 30 days. I would imagine this means he expects some kind of funding or that someone else will be completing the project. Or, he's BS'ing again.

Sunday, October 15, 2006 2:31:00 PM  
Anonymous Anonymous said...

What about the Kara attorney that stated that homeowner deposits will be returned? How can he say that...

Monday, October 16, 2006 11:50:00 AM  
Blogger SCProfessor said...

I suspect that for him to say anthing other than that, well he would have to investigate deeper and such an investigation might establish that his client violated both criminal and civil laws relating to misappropriation of funds.

So, in essence what he has done is take the client's word that there has been no misappropriation and based upon this rather shallow investigation said what needed to be said to get the heat off.

Truth is if there has been a misappropriation the attorney will take the role of a "victim" and claim that he too was mislead by his client.

A friend of mine who practices criminal law reminded me a while back about the three rules.
Rule 1: Get your money upfront.
Rule 2: It' the client, not you, who goes to jail.
Rule 3: Get your money upfront.

Monday, October 16, 2006 2:01:00 PM  

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