“The delinquency rate for office loans has surged to 10.4%—just shy of the peak during the 2008 meltdown,” warns Taylor Kenney of ITM Trading. With $1.5 trillion in commercial real estate debt maturing by 2025, the ticking time bomb of vacant office buildings could trigger a domino effect through the economy.
As delinquencies spike, small and regional banks are holding dangerously high exposure—150% to 228% of their total risk capital tied to these loans. “All it takes is a 10% loss in commercial real estate loans to render 100 banks undercapitalized. At 20%, that number jumps to 900,” Kenney explains.
Despite media assurances of stability, the cracks are undeniable. When banks fail, it’s not just their problem: lending tightens, jobs vanish, and property values collapse. The ‘kick the can’ strategy is running out of road.
“Do not count on the Fed, the FDIC, or even larger banking institutions to save hundreds of banks simultaneously. It’s just not going to happen that way.”
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