CEO of Starwood Capital Group, Barry Sternlicht, issues warning of potential bank failures in the US, citing struggles in real estate industry. Sternlicht predicts one regional bank failure per week due to rising interest rates and inflation. Recently, Republic First Bank collapsed with $6 billion in assets and $4 billion in deposits seized by FDIC.
Sternlicht has been sounding the alarm on economic problems for over two years, particularly highlighting vulnerabilities in sectors like real estate and regional banking to rapid rate hikes. He is calling on the Federal Reserve to lower rates to support struggling banks.
The real estate sector is facing challenges, with the office market experiencing what Sternlicht calls an “existential crisis.” Multiple industry leaders are warning of potential issues at regional banks due to underwater real estate loans. Scott Rechler predicts consolidation of 500 or more banks in the next two years.
Sternlicht believes Federal Reserve Chairman Jerome Powell will ultimately cut rates to save community banks and boost the economy. He argues that the current rate hikes are not effectively reducing inflation and are instead harming real estate and regional banks. Sternlicht believes Powell will lower interest rates to reduce interest costs and stimulate economic growth. Stay tuned to Jala News for updates on this developing story.
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