An analysis released in early June suggested that more than 300 banks could be at risk if the current commercial real estate downturn continues.
Some 300 banks have so many loans on their books dedicated to commercial real estate that if the economy crashes in the worst-case scenario, all of their Tier 1 capital could be wiped out. according to Based on a statement by CBRE Chief Economist and Head of Research Richard Berkham, shared by American Banker. Berkham made the comment at the National Association of Real Estate Editors conference, but there wasn’t much good news for the audience.
CBRE analyzed Federal Deposit Insurance Corporation data across approximately 4,800 insured bank balance sheets to identify aggregate exposure in sectors related to commercial real estate. After applying a hypothetical stress scenario to the data, property values and net operating income fell sharply, recording a total loss.
Financial expert explains why economy collapses in perfect tweet |@DailyCaller
@michaeljburryAnother success…so wild https://t.co/umbhH3s5Si
— Kay Smythe (@KaySmythe) March 13, 2023
Barkham said this scenario is unlikely, but would result in the failure of 311 banks, mostly regional banks. Twenty regional banks and one major bank will also be at risk. The actual bank name was not disclosed, which sounds a bit silly to me. If there is risk, tell those who are at risk, Amilite?
Total asset losses from bankruptcies are expected to be about $600 billion, three times more than currently failed Silicon Valley banks.
“This is going to be a problem for banks’ earnings. Banks will have to write down loans and impair earnings, but it won’t be enough to bring the banking system down,” Mr. Barkham said. “I think it would be irresponsible to suggest that it would.”
Further complicating the matter is that about $270 billion of commercial mortgages held by banks are due to mature in 2023 alone, making it impossible for property owners to depreciate their assets too much. Possibly because of the fact that they are forced to try to refinance. (Related: Flashback: Barney Frank Tells Daily Caller’s Kay Smythe He’s a Signature Bank Executive)
When it comes to the residential real estate sector, skyrocketing interest rates and housing overvaluation have left thousands, if not millions, of people across the United States vulnerable to how economically they are. I do not know at all whether I am in poverty. I can’t count the number of friends and family who have bought vastly overvalued properties at 5% or more interest rates over the past two years, but when the bubble bursts none of them will be able to refinance. crumbling down.
If so, talk to your financial advisor now. When this financial catastrophe really hits fans, I hope I can keep myself out of Occupy Wall Street when it appears again.
