Welcome to the home of Noah Brier. I'm the co-founder of Variance and general internet tinkerer. Most of my writing these days is happening over at Why is this interesting?, a daily email full of interesting stuff. This site has been around since 2004. Feel free to get in touch. Good places to get started are my Framework of the Day posts or my favorite books and podcasts. Get in touch.

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The Role of the Small States in the Housing Crisis

When I was out in Montana last month I had a conversation about how the state had been hit by the economy. As Scott, who runs the Entertainment Management Program at University of Montana explained, it actually hadn’t been slammed as badly as the rest of the country since many of its banks were local and hadn’t made the same sort of aggressive loans that the big banks had.

I kind of took it all with a grain of salt until this weekend when I read the interview with an anonymous hedge fund manager. Anyway, all of a sudden it popped back in my head. Could it really be possible that this was a problem focused around the big states that held the big banks? As I thought about it some more I realized that most of the stories I had read focused on Florida, California, Ohio and a few of the other biggest states in the country, not necessarily those smaller population ones in the middle of the country. But still, it didn’t all add up and I was skeptical.

Then yesterday my friend Justin forwarded me along a New York Times article that pretty much spelled out the big bank/little bank divide. The article explains, “Though they greatly outnumber the national and regional banks, community banks have barely registered in any of the fallout from the credit crisis, in part because they hold less than 10 percent of the $13.8 trillion in bank assets nationwide.” It even spells out the geography issue:

The 50 or so bank failures have been largely clustered in a few states, like Florida, Arizona and California, where the bursting housing bubble had the greatest impact.

In states like Indiana, where property values never soared, community banks have been rock solid. The last failure in the state was in 1992.

Anyway, be curious to know if anyone has more info on this one. I guess I’m just really surprised I haven’t read more about this.

May 12, 2009