[Alex Pollock, Resident Fellow at the American Enterprise Institute, authored an interesting and informative piece covering the evolution of real estate lending by banks over the past 150 years. I recommend it to you.]
“Strewn all over was the wreckage of the banks which had become entangled in the financing of real estate promotions and had died of exposure to optimism.”
That memorable statement is from Jesse Jones, the head of the 1930s U.S. Reconstruction Finance Corporation, describing Chicago in 1932. But it applies to many banking sectors in many countries, before and since, of course including the destructive real estate bubbles of our 21st century. Having financing available for real estate, especially for home ownership, is a good idea, but not when leverage and optimism run to extremes, as they often do, historically speaking. Real estate is the most common element in credit over-expansions and busts and a permanent temptation to banks.