Keeping Up with the Fed’s Debacles

May 08, 2023

by Publius Tullius Senex American Thinker

Defaults on commercial real estate (CRE) properties have surged to a new high unseen since the global financial crisis (GFC) of 2008-9. Major companies with hundreds of billions of dollars in assets have chosen to default on billions of dollars of mortgages in recent months. The total value of U.S. commercial real estate has crashed by more than 17% in the past year.

First Republic Bank was seized by the financial authorities as the second biggest bank failure, on top of the failures of Silicon Valley Bank, Signature Bank, and Silvergate Bank. The FDIC’s insurance fund’s account as of Q2 of 2022 reported assets of slightly more than $124 Billion to safeguard banks with total assets in excess of $23 Trillion, and has reported the cost of takeover of the three recent smaller banks as more than $20 Billion, a significant part of their assets. In the event of even a minor banking crisis, the FDIC will be insolvent hours before close of business on day 1.

It may be helpful to refresh your memory as to how we have arrived at this point.