We know what’s coming and we are prepared.
🇺🇸📉💸 Regional banks are facing a perfect storm of credit problems, with commercial real estate loans comprising 44% of their portfolios versus just 13% for large banks. Office loan delinquencies have hit 10.4%, approaching 2008 crisis levels, while over $1 trillion in CRE loans must refinance by year-end in a higher-rate environment.
The Fraud Factor
Recent disclosures reveal deeper problems beyond market stress. Zions Bancorporation disclosed $60 million in provisions and $50 million in write-offs related to alleged loan fraud from its California division, while Western Alliance faced similar issues. These incidents echo Jamie Dimon's warning about "more cockroaches" in the credit market, suggesting systematic underwriting problems beyond economic cycles.
The Concentration Risk
Florida Atlantic University analysis found 59 of the 158 largest banks have CRE exposures exceeding 300% of total equity capital. New York Community Bancorp's Flagstar subsidiary shows a particularly dangerous 477% CRE concentration ratio. Many banks are using "extend and pretend" strategies, restructuring loans to avoid immediate write-offs while masking underlying problems.
The Systemic Implications
Studies suggest a 1% increase in non-performing loan ratios can decrease GDP growth by 0.1%, creating vicious cycles where economic weakness worsens credit quality. The concentration of regional bank problems in CRE mirrors historical patterns from the S&L crisis of the 1980s, when similar interest rate and real estate pressures caused widespread failures.
My Take
This analysis confirms that March 2023's regional banking crisis was papered over rather than resolved. The combination of CRE concentration, interest rate pressure, and emerging fraud cases suggests the underlying problems have worsened. When banks resort to extend-and-pretend strategies while facing refinancing walls on $1 trillion in loans, it creates conditions for a more severe crisis than what we saw in 2023. The moral hazard from implicit government backstops has encouraged more risk-taking rather than better management.
🔗 Hedgie
Miatta Fanbulleh is Liberian.
She is now in charge of Britain's Energy Security.
Meanwhile this is what Liberia looks like:
Beaches covered in excrement.
No waste management.
Absolute filth.
THE COST OF THE AMERICAN DREAM HAS EXPLODED.
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Owning a home.
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Buying groceries.
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Driving to work.
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Paying insurance.
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Even your morning coffee.
Nearly every major household expense costs dramatically more than it did just a few years ago.
Over the last 7 years:
• Coffee: +127%
• Home prices: +60%
• Auto insurance: +51%
• Gasoline: +49%
• Electricity: +44%
• Shelter: +35%
• Groceries: +33%
And that's before paying for healthcare, transportation, or eating out.
This is why so many families feel like they're falling behind even when they get a raise.
The biggest financial problem for millions of Americans is that everything is going up at the same time, while the government keeps showing a 2% inflation target.
🄳🄾🄾🄼🄿🤖🅂🅃🄸🄽🄶
Biohacker Bryan Johnson claimed he cloned himself as a newborn for the purpose of providing him blood and cells.
