An International Monetary Fund insider said it was “very possible” that there would be a new reckoning in the U.S. banking industry.
Desmond Lachman, former deputy director of the IMF’s Policy Development and Review Department, expects 2024 to be a tough year for U.S. banks, China’s state news agency Xinhua reported. report.
Ruckman says.
“It is very likely that another regional bank crisis will occur in 2024. All of this could pose serious risks to the economic recovery.”
Local banks are in a precarious position, with about 18% of their loan portfolios in the struggling commercial real estate industry, said Lachman, who is also a senior fellow at the economic think tank American Enterprise Institute (AEI). talk.
“Large real estate investors like Brookfield and Blackstone are starting to get out of mortgage lending, Luckman said.
In this scenario, it is likely that commercial property owners will start defaulting on their loans, perhaps by next year. That would be very bad news for small and medium-sized banks. ”
The former official’s warning comes as banks grapple with a net decline in deposits last year.
according to data According to a statement from the St. Louis Fed, U.S. banks lost $359.32 billion in deposits from December 21, 2022 to December 20, 2023.
A recent Fed survey of market experts, academics, investment funds, and research and advisory firms found that the U.S. banking industry is in a state of concern.
Participants said that while the sector may have withstood the 2022 financial crisis, banks remain at risk of exposure to a new crisis for two main reasons.
“Survey respondents noted that the banking sector has stabilized since a period of severe stress earlier this year, but given that the majority of deposits remain uninsured, many are likely to see another round of deposit outflows. emphasized the risks.
Many respondents continue to link the risk of renewed stress in the banking sector to the potential loss of commercial real estate (CRE) exposures, particularly among smaller and regional banks. ”
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