By: Ronald D. Struck                                                               June 8, 1993

BANK BULK SALES

A headline in the Wall Street Journal on June 7, 1993 read - "Banks Mull Benefits of Bulk vs. Single Real Estate Sales."  Why did the article say they were doing it?  Because..."we wanted to insulate ourselves from further erosion of the real estate market,” it... "allowed us to mitigate the operating, regulatory, and internal management costs," and "If you look at the 15% to 20% carrying cost, it doesn't take but one or two years to justify a pretty significant discount."

Banks with large portfolios of real estate are, or at least at one point were, in the business of making real estate loans.  If they were conducting their business professionally, one would assume that they had created an organizational structure to handle all aspects of real estate lending, including collections and foreclosures.

If these bulk sales are the most efficient means a bank has to deal with their real estate positions, they shouldn't be in the real estate lending business.  I wonder how they handle the rest of their lending activities.

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