CNBC: 282 Banks at "risk of failure" from commercial real estate and Fed rate hikes.
When the Fed was founded it solemnly swore to protect the dollar. That has morphed into a bailout industrial complex — a "third mandate" — that is increasingly too big to bail out. pic.twitter.com/VMeBe5wmE8
— Peter St Onge, Ph.D. (@profstonge) June 5, 2024
Consulting firm Klaros Group analyzed approximately 4,000 U.S. banks and found that 282 banks face a dual threat. These threats stem from both commercial real estate loans and potential losses tied to higher interest rates. It’s important to note that the majority of these banks are smaller lenders with less than $10 billion in assets. While most of these banks aren’t insolvent, they are experiencing stress. Consequently, there may be fewer bank failures, but communities and customers could still be indirectly affected by reduced investments in areas like new branches, technology, and staff. If a failing bank is insured by the FDIC, depositors will be protected up to at least $250,000 per depositor, per FDIC-insured bank, per ownership category.
CRE Charge-Offs Remain Elevated
Charge-off rates, which represent the value of loans and leases removed from the books and charged against loss reserves, also warrant attention. In Q1, the charge-off rate on commercial real estate loans saw a quarter-over-quarter decrease, with… pic.twitter.com/kn0Qcvbw7a
— Reef Insights (@ReefInsights) June 5, 2024
The FDIC also currently has $128B (DIF) on hand to backstop more failures… which is only half of the just one of the banks that failed in 2023 (SVB as example) t.co/gL4XHTPQVY pic.twitter.com/OlTrisb8k6
— Bitcoin Beelzebub (@GSR6669) June 5, 2024