I am pretty certain a bank's charter does not allow it to own real estate. It is not what it was created to do.
Banks do not want to own real estate because they can't legally own it, just foreclose on it and liquidate the temporary holdings through sheriffs sales. Unfortunately, this recession has gotten so massive, that properties are not being sold at these sales. The real estate is an asset and is held in receivership by the lender, not really owning it, but still responsible for it. That is why they set up REO's, short sales and a network of brokers to dispose of these assets in all the various stages of receivership. In short, it is a mess, and they are working through it the best they can.