Qualtik’s Post

Banks have learned from past crises, such as the 2008 financial meltdown, and have taken steps to strengthen their resilience against potential shocks in the commercial real estate (CRE) market. However, the readiness of banks for a collapse in the CRE market can vary depending on several factors: https://lnkd.in/eZx8X-xt #banking #commercialrealestate #cre American Bankers Association Bankers, Markets & Investors Commercial Real Estate Commercial Real Estate Women NAIOP

Is the Fed lender of last resort, everyday source of liquidity or something in between? "Nearly a century after the Fed first tried to discourage regular borrowing from its traditional backstop program, known as the discount window, officials are trying to rebrand the primary credit facility as a source for everyday liquidity." "That mission has become more urgent in the wake of the collapse of Silicon Valley Bank and other regional lenders in the first half of 2023. Regulators were shocked by the rapid flight of deposits, but also that SVB and others were ill-prepared to even access the discount window, instead relying heavily on borrowings from the Federal Home Loan Banks, which can push up funding costs for everyone." “'Banks need to be ready and willing to use the discount window in good times and bad,' Fed Vice Chair for Supervision Michael Barr said in a Dec. 1 speech." "Now regulators, including the Fed, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp., are drafting a plan to require that banks tap the facility at least once a year, a measure aimed at reducing the stigma for users." "While there have been previous attempts to revamp the window, it requires buy-in from every level of the financial system and its overseers, from banks to supervisors, analysts, ratings agencies and market participants that have longed eyed the facility with suspicion." "Some have said the Fed should abandon reforms altogether and instead strengthen its Standing Repo Facility, where institutions can borrow cash in exchange for Treasury and agency debt at a rate that’s also in line with the top of the central bank’s policy target range. Yet so far there’s only about 26 counterparties, in addition to the primary dealers, out of the thousands of banks in the US." There is still a stigma, within the industry, around using the discount window. However, this stigma is partially the fault of the Fed. It's gone through various periods where it took a dim view of use of the window for anything but a last resort. #Banks #rates #liquidity #federalreserve https://lnkd.in/gtCC_PNa

Last week I zoomed into the Cleveland Fed Financial Stability Conference. I was appalled by what I heard.  The presenters were mostly academics from extremely prestigious institutions (there were no actual bankers), but they understand NOTHING about how banks, or the banking system actually works.  Think I’m kidding? Two examples: first, they are all wringing their hands over deposit outflows, but QT was never mentioned.  None of them seem to understand that system deposits are shrinking not because of outflows to MMMF’s or depositor concerns about bank safety, but because the Fed is reducing its balance sheet.  (Why the Fed thinks this a good idea is a mystery to me.) Second, they are all (including a prominent Harvard man) concerned about how banks “fund” themselves.  CLEARLY, NONE OF THEM UNDERSTANDS THAT BANKS DON’T FUND LOANS AT ALL.  THEY CREATE DEPOSITS. What a bunch of maroons. I don’t know what one can do to fight this other than write diatribes from time to time. The Cleveland Fed will be posting its conference on its website.  I’ll provide a link when they do.  Then you can be as appalled (and frustrated) as me.

Despite the doom-and-gloom headlines of the past year in CRE, Fed Chair Jerome Powell assured lawmakers earlier this year that the challenges of CRE are still "manageable" for banks, which is good news for us all. The team of commercial specialists at St. Louis Title are ready to talk with you about your investment ideas and help you be ready for any circumstance! Call us today at 314.480.4575. #STLcre #commercialrealestate #saintlouiscre

As promised, here’s more on why a federal shut-down stokes systemic risk. 1) Critical portals abandoned on a vulnerable grid. 2) Treasury market already fragile. 3) Over time, most households start missing rent, mortgage, other payments. More slow-burn stress for finance isn’t necessarily systemic, but something could easily blow. Republicans loving all this chaos are truly playing with fire. #governmentshutdown #households #systemicrisk #stressforfinance

Recently, New York Community Bank (NYCB) has faced significant financial turmoil, leading to a sharp drop in its stock price. This was primarily due to the need for a large cash injection and issues related to the bank's financial controls. Notably, these problems were exacerbated by difficulties in the commercial real estate (CRE) loan market and the effects of rising interest rates, resulting in a substantial quarterly loss and downgrades by credit rating agencies. In light of these events, I would like to draw your attention to my paper, "The Rise of Monetary Base (M0) Amidst a Decline in Broader Monetary Aggregates and the Impact of Elevated Interest Rates on Banking Liquidity and Credit Risk." This research delves into the challenges facing banks due to the current monetary policy environment, focusing on the risks associated with the CRE loan market. Interestingly, the paper identified several banks, including NYCB, as being at high risk due to their exposure to CRE loans. This prediction, made two months before NYCB's issues came to light, specifically flags the vulnerability of certain banks to CRE market fluctuations and the broader implications for financial stability. The situation at NYCB serves as a case study for the broader trends and potential pitfalls highlighted in the paper. I encourage you to read the paper for a detailed analysis of these critical banking sector challenges. Your feedback would be greatly appreciated, as it is crucial for understanding and navigating the complexities of the current economic landscape. Link: https://pdf.ac/2oxRJ2 #BankingCrisis #MonetaryPolicy #CommercialRealEstate #Economics #Finance

The bear market of 2007–2009 was a significant downturn in the U.S. stock market, characterized by a prolonged period of falling prices, economic recession, and widespread financial crisis. It was triggered by the subprime mortgage crisis and the collapse of the housing bubble, leading to a global financial meltdown. The market experienced substantial losses, with major indices like the S&P 500 and Dow Jones Industrial Average plummeting by over 50% from their peaks in 2007. Following the 2007–2009 bear market, the U.S. government implemented several regulatory actions, including: 1. Dodd-Frank Wall Street Reform and Consumer Protection Act: This legislation aimed to enhance financial regulation, increase transparency, and prevent future financial crises by implementing stricter oversight of banks and financial institutions. 2. Creation of the Financial Stability Oversight Council (FSOC): The FSOC was established to identify and monitor systemic risks to the financial system and coordinate responses to potential threats. 3. Volcker Rule: Named after former Federal Reserve Chairman Paul Volcker, this rule restricts banks from engaging in certain speculative activities, such as proprietary trading, to reduce the risk of another financial crisis. 4. Stress Tests: Financial institutions are now required to undergo regular stress tests to assess their ability to withstand adverse economic conditions, ensuring they have adequate capital reserves. These measures aimed to address the weaknesses exposed by the financial crisis and mitigate the likelihood of similar events occurring in the future.

🔍 Exploring the Financial Landscape: The U.S. Federal Reserve unveils scenarios for annual stress tests, examining the resilience of 32 major #banks under severe economic conditions. 📈With a 10% U.S. jobless rate and real estate price collapse in focus, these tests, born post-2008 crisis, play a pivotal role in defining banks' required capital and influencing shareholder returns. 🏦 This year's scrutiny intensifies amid last year's bank failures and disputes over capital hikes. Results of the stress tests are expected to be published in June 2024, revealing insights into banking resilience and responses to broader risks. 🔗 Read more: https://lnkd.in/gs5d2hwC #FederalReserve #FinancialStressTests #BankingResilience

Regional Bank Stocks in Turmoil: Moody's Downgrade Sparks Commercial Real Estate Crisis Concerns 1. Moody’s downgrade of New York Community Bancorp’s credit rating to junk status exacerbates sell-off in regional bank stocks. 2. Investor fears rise over distressed commercial real estate sector in the United States. 3. N.Y.C.B.’s shares plummeted up to 15% in premarket trading, rebounding later; down 60% in the past week due to exposure to souring commercial real estate loans. 4. Acquisition of Signature Bank assets pushed N.Y.C.B. above $100 billion in assets, subjecting it to stricter capital requirements. 5. The KBW Nasdaq Regional Banking Index drops nearly 12% in the past week due to concerns over lenders’ exposure to commercial real estate loan portfolios. 6. Plunging office occupancy rates and high-interest rates contribute to the crisis. 7. Shift in working practices post-pandemic roils commercial real estate market; lenders face potential “maturity wall” of $1.5 trillion in commercial real estate loans. 8. Treasury Secretary Janet Yellen acknowledges risk to some banks but downplays wider crisis concerns. #businessnews #financenews #globalmarkets

Federal Reserve Governor Lisa Cook's recent remarks at the Brookings Institution shed light on the current state of commercial real estate risks, emphasizing that while sizable, they remain manageable. With a focus on financial stability amidst potential shocks, Governor Cook outlines key areas of monitoring, including leverage, liquidity, and asset valuations. Her insights provide a nuanced perspective on the challenges faced by banks with high CRE concentrations, highlighting the need for proactive risk management strategies. As we navigate evolving market dynamics, staying informed and adaptable is crucial for sustainable growth in the CRE sector. Bio: https://lnkd.in/eB3g9bP3 Google Business Profile: https://lnkd.in/egn5jSck LinkedIn: https://shorturl.at/bmDMV Facebook: https://lnkd.in/eGTqGWuN Instagram: https://lnkd.in/eZMXQpjn TikTok: https://lnkd.in/ejfsyqfM #commercialrealestate #commercialproperty #CommercialLand #commerciallandforsale #warehousespace #officespace #flexspace #industrialspace #sandiegocommercialrealestate #sandiegorealestate #realestate #cre #realtor #realestateagent #realestateinvesting #property #commercial #commercialproperty #realestateinvestor #business #investment #propertymanagement #investmentproperty #residentialrealestate #forsale #retail #entrepreneur #construction #officespace #realestatebroker #EconomicInsights #InflationAnalysis #FedPolicy