Professor Glenn A. Okun
The Rabid Capitalist: The Big Point is a brief summary of a detailed note available to paid subscribers.
The Federal Reserve Board has become concerned about the banking system’s exposure to commercial real estate loans. For the first time, its quarterly Report on Financial Stability featured a section on these risks. The Rabid Capitalist has been discussing these threats since July (see https://therabidcapitalist.com/2023/07/25/bank-lending-diet-or-starvation/, https://therabidcapitalist.com/2023/10/03/hybrid-work-threatens-the-downtown-economy/, https://therabidcapitalist.com/2023/10/14/switchers-stop-quitting-and-the-smart-money-exits-office-reits/ and https://therabidcapitalist.com/2023/10/18/commercial-real-estate-correction-continues/).
The Fed’s concern extended beyond analysis in its quarterly report. Its bank supervisors have developed more extensive examination procedures for banks with these exposures.
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