Billionaire Investor Predicts Weekly Bank Failures; UK Economist Foresees a "New Dark Age"

Barry Sternlicht's Warning on Regional Banks

Barry Sternlicht, a billionaire real estate investor and the CEO of Starwood Capital Group, has issued a grave warning about the future of America's regional banks. According to Sternlicht, these banks are likely to fail at a rate of 'one or two' per week. In a recent interview with CNBC, Sternlicht expressed his concern about the primary real estate lenders - community and regional banks - which he believes are on the verge of a crisis. Sternlicht added that the ongoing rate hikes by Federal Reserve Chair Jerome Powell will continue to have repercussions for the real estate sector. He suggested that the rapid rise in rates is causing significant strain on the real estate markets and the $1.9 trillion of real estate loans is currently in a fragile state.

The Fed's Dilemma and the Potential Banking Crisis

As noted by Schiff Gold, the Federal Reserve must cut rates to avoid a banking crisis. The most vulnerable firms are smaller banks with assets under $10 billion, along with a few larger regional ones. Some of these banks might be able to avoid closure by putting a halt to expansion plans or offering fewer services. Others could potentially save themselves by merging with larger banks. However, with inflation too high for the Fed to cut rates now, a "higher for longer" interest rate policy seems increasingly likely. Banks with high exposure to troubled commercial real estate are particularly at risk of sparking a chain of small collapses that could lead to larger ones and potentially result in a real estate crisis.

Current State of Regional and Community Banks

There are over 4,000 regional and community banks across the United States. However, since the beginning of 2024, only one - Republic First Bank - has closed after the FDIC seized $4 billion in deposits and $6 billion in assets last month.

UK Economist's Warning

In a similar vein, UK fund manager Godfrey Bloom has issued a warning about the banks' solvency. Bloom, a former MEP and economic spokesman for Nigel Farage, told former UK parliamentary candidate Jim Ferguson on his podcast that "we are entering a new dark age." He advised people to withdraw their money from the banks.

Closing Thoughts

The predictions of these financial experts paint a grim picture of the banking and real estate sectors. The potential for weekly bank failures and a "new dark age" is certainly cause for concern. However, it's important to remember that these are predictions, not certainties. What are your thoughts on these warnings? Do you think we're on the brink of a banking crisis, or are these predictions overly pessimistic? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.