Rustico: I don’t have experience with publicly traded institutions, but I have to believe between SOX (Sarbanes Oxley Act) and banking regulations and compliance guidelines that there is going to be significant pressure to move sub- and non-performing assets (houses) and loans off the books.
If a company is forced between a write down (sale at a loss) or a write off (complete liquidation), they will universally choose the former.
I mentioned the Wall Street expression, “Don’t panic, but if you panic, panic first” in another thread/posting here, and I believe that it definitely applies here. These banks have to know that other institutions are facing the same situation they are and, if forced to move expeditiously to clear the books, they will and do their level best to mitigate losses by moving first and fast.
The other key difference between banks and homeowners trying to sell is that at some point, the bank will take the hit because they have to – no matter how painful in the short-term. Homeowners are more driven by emotion and thus will try to hold off and sell dear.
