Bank Failures Are Coming (Do This ASAP)

Let’s discuss the Federal Reserve comments on the 2024 Banking Crisis – Thanks for watching! Click the link below to get DELTA Pro Ultra and related bundles. Now enjoy 6 months of interest-free payments & 5-year installment plan offer. The Smart Home Panel 2 Installation Consulting Service ensures a hassle-free setup by tracking orders, managing fittings, and answering technical queries for TX/CA homeowners. EcoFlow Website: https://bit.ly/3HREAAB
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THE 2024 BANKING CRISIS:

Commercial Real Estate values are plummeting, with Morgan Stanley estimating that the “entire market could decline 40% – which is the same magnitude that we saw throughout the 2008 Financial Crisis.”

As CNN explains, “US banks hold about $2.7 TRILLION dollars in Commercial Real Estate Loans…and about 80% of that is held by smaller, regional banks…the ones that the US government hasn’t classified as “too big to fail.” On top of that, “More than $2.2 Trillion will come due between now and the end of 2027, so regional banks could have problems collecting on those loans.”

All of this was driven by New York Community Bancorp which “reported a surprise loan loss of $552 million dollars, driven partly by expected losses on commercial real estate loans.” In this case, “the bank identified a pair of loans in particular — one related to an office complex and another for a co-op residential building — that were responsible for as much as $185 million in losses.”

Germany’s biggest lender, Deutsche Bank, also said that it allocated $133 million during “the last quarter to absorb potential defaults on its US commercial real estate loans. That’s more than quadruple the amount it set aside during the same three-month period in 2022.”

In response to this, Jerome Powell said that “There’s some smaller regional banks that have concentrated exposures in these areas that are challenged and we’re working with them. It feels like a problem we’ll be working on for years. It’s a sizable problem.”

According to the National Bureau of Economic Research, about 14% of “all commercial real estate loans and 44% of loans on office buildings appear to be in a negative equity position, meaning the debt is greater than the property value.” As they say, “That increases the risk that borrowers won’t repay and will default on their loans” – which eventually falls back on banks that may or may not have the ability to survive the loss.

Thankfully – Jerome Powell said that “there will be losses for the owners and for the lenders, but it should be manageable.” 

He also went on to say “The economy’s strong. The labor market’s strong. Inflation’s coming down. We don’t have a perfect crystal ball about the future, and things could happen. But I do think the economy is in a good place, and there’s every reason to think it can get better.”

In terms of New York Community bank, “analysts at Bank of America cited “feedback from management” that New York Community Bancorp was not experiencing any unusual deposit activity.” However, their share price has continued declining – so, investors aren’t exactly optimistic about the short-term future, despite what analysts say.

Of course, full disclosure: anything can happen, I have no idea what I’m talking about, don’t listen to a random guy on YouTube, always consult a professional for your own specific situation, and all of this is purely my opinion.

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