Stress from Commercial Real Estate Will Persist

Regional banks are being disproportionately impacted by the deterioration in the CRE market and are increasing their credit loss provisions for these loans. Market downturns are being felt mostly through office loans and multifamily commercial loans. Many regional banks are also choosing to no longer originate new CRE loans. Though loan fire sales have not occurred, the Federal Reserve has indicated that CRE-related risks are likely to stay in the banking system for years.

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