Commercial real estate crash: banks face grave consequences

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TLDR: Commercial real estate in the US is facing a mounting crisis that poses major problems for banks. Despite the recent interest rate cuts by the Federal Reserve, the commercial property slump continues to worsen, leading to rising bankruptcies and a solvency problem for banks. A report by the National Bureau of Economic Research highlights the distress in the commercial property sector, with loans in negative equity and facing refinancing challenges. The rising interest rates have led to a decline in banks’ asset values and could potentially lead to insolvency for hundreds of smaller regional banks. The situation has major implications for the stability of the US banking system and suggests a deep historical crisis in American capitalism.

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