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Highs & Hazards: Market Surges and Banking Risks
Manage episode 400874832 series 3418897
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On this episode of THE FINANCIAL COMMUTE, host Chris Galeski invites Wealth Advisor Patrice Bening to examine the stock market, the economy’s resilience, and last year’s banking crisis that may potentially resurface.
They discuss the exposure of small and mid-sized banks to commercial real estate loans. With interest rates on the rise, these banks face increased risk as loans come due and need refinancing. Given the tightening credit guidelines, there is a looming threat of liquidity issues, which could compound the challenges these banks are facing. Especially given the high vacancy rates in office spaces, and the fact that small and mid-sized banks hold nearly 70% of the outstanding loans on commercial real estate, there could be a potential risk to the broader financial system if these loans begin to default, thus re-triggering a regional banking crisis.
Although the markets are hitting new highs, it is extremely important to monitor economic indicators closely, stay updated with new policies, be mindful of FDIC insurance limits, and gain a better understanding of how banks operate, including reserve requirements and liquidity positions.
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