Buckle up everyone, the banking crisis only looks to be in the eye of the storm, so to speak. Following the crisis that saw several banking giants fail earlier this year, we have seen some relative calm when it comes to bank closures and forced mergers. However, the worst has yet to occur, sources claim…. Banks are closing down their local branches at alarming rates and have laid off more than 60,000 workers in 2023 alone—does this look like healthy behavior to you?… Vivek Ramaswamy recently warned of another 2008-style financial crisis fomenting: “Bank of America is now providing *loans without down payment* for home buyers in “black & Hispanic Communities.” Mark my words: This act of “anti-racism” today will be called “systemic racism” tomorrow – when minorities end up defaulting on these loans….” Customers of banks are being alerted to the impending wave of branch closures that is expected to occur in 2024. In the UK, the closure of high street bank and building society branches has been made worse by …All of this is actually part of a longterm decline and restructuring of banking, some of it due to conglomeration:
In all, the number of bank branches in the U.S. has shrunk by more than one-fifth to just 78,000 today from nearly 100,000 in 2009. Soft profits and aggressive cost cutting mean still more Americans will see their local bank branch close its doors in 2024.This does not mean calamity is front and center. Some of it is normal due to endless conglomeration, but many people quoted in the article see calamity coming. So, while the article is soft on data that proves a banking collapse is imminent, it certainly shows many people are fearing it, while all the recent announcements of branch closures enhance that concern. Perhaps more significant than the fears talked about in that article is the solitary warning last year by JPMorgan’s chief, Jamie Dimon, who said we would see more bank collapses due to the crash in commercial real estate.
US office buildings face $117BN debt time bomb: Mortgages due this year threaten to sink US economy as thousands of workplaces remain empty…. Billions of dollars in loans on office buildings that are about to come due could play havoc with the US economy after interest rates soared.The volume of defaults that will come out of that is going to place some serious pressure on banks — the kind Jamie Dimon warned was all but inevitable, and it is already causing a wave of defaults:
A big chunk of it is at risk of defaulting and costing banks and developers huge sums, sending some into insolvency…. Economists last month found 40 per cent of office loans on bank balance sheets were underwater - owing more than the property is worth…. Moody's Analytics estimates 224 of the 605 loans that will expire soon will be tough to repay or refinance because their owners have too much debt or the buildings aren't making them enough money.This is simply what we KNOW is coming. Of course, if they can all hold on until the Fed starts cutting rates, they might make it through, but many don’t have much holding power left. Many have already lost it and flushed away. How long until more banks just cannot absorb it all? We’ll find out, as in the past, some Monday morning after the Fed and Feds cobbled together another massive rescue package. Of course, this has a broader impact on the real-estate industry outside of what it does to banks that finance these projects:
The prospect of a widespread default and subsequent dips in demand could stifle construction and development in major US cities - many of which are still struggling to recover in the aftermath of the pandemic.So, it erodes out a path to further recession of the kind we are already seeing.
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