So if a bank based in California fails it has nothing to do with Garrett County and Deep Creek Lake right?

Not exactly.

Of course the bank in California I'm referring to is IndyMac which failed because they took excessive risks and made a lot of bad loans to people who could never afford to pay them back. Eventually their capital structure had been degraded to the point that they could not even return money to depositors and as you probably know had to be taken over by the FDIC. So how on earth does any of this relate to little old Garrett County? Simple, this Deep Creek vacation house as one example was funded by IndyMac and based on the fact that it is now listed as a short sale the out-of-town borrowers are in trouble and cannot keep up with their payments. Therefore, a small piece of the cash flow IndyMac was counting on to maintain its solvency as a legitimate bank wasn't coming in each month. Add up enough of those and you have the recipe for a bank failure or many of them even. So just because people tell you that the national housing bubble bursting and banks based in California failing has nothing to do with Deep Creek Lake and Garrett County doesn't necessarily mean it is true.

And now that the FDIC is basically running IndyMac guess who is taking the loss on this Deep Creek vacation home? IndyMac? Nope. The speculators in Pittsburgh? Nope. You and me, the taxpayers? Yep, that's right! And just this week the Wall Street Journal reported that the FDIC may have to borrow even more money from the Treasury to cover their own cash flow problems. Better open up your wallet and get ready to folk over more cash to bail out all these bad investments!

And that's on top of all the money we are all paying to subsidize another Deep Creek real estate blogger's new lakefront home through one of those "tax avoidance schemes" you hear about. More on that in a couple days.

Don't forget to check back to Dan's Deep Creek Blog for future updates.