Wednesday, August 27, 2025

Barry Sternlicht Warns of More Bank Failures: ‘Every Week, Maybe Two A Week’

Barry Sternlicht, CEO of Starwood Capital Group, warns that we’re potentially “going to see a regional bank fail every day, or not—every week, maybe two a week.” 

In a recent interview with CNBC, Sternlicht said that the rapid rise in interest rates has hit the real estate market hard, particularly the office sector, which could lead to significant losses for banks holding real estate debt.

Industry experts have warned about potential issues at regional banks due to underwater real estate loans, with some predicting a consolidation of banks in the coming years. So far this year, however, there has only been one bank failure, the Republic First Bank in April.

“He’s got a hard task, with a blunt tool, and the consequence is the real estate markets are taking it on the chin because rates rose so fast. We could have handled this, but we couldn’t handle it this fast,” the billionaire said. “The 1.9 trillion of real estate loans, that’s a fragile animal right now.”

Sternlicht argues that lowering interest rates could help alleviate the pressure on these banks by increasing the value of their assets. He believes that Federal Reserve Chair Jerome Powell will eventually cut rates, recognizing the limited impact of rate hikes on inflation and the burden of the national debt.

Powell recently acknowledged that mounting bad commercial real estate loans could cause some bank failures but maintained that the overall system is not at risk. The Fed is working with lenders to ensure they are prepared for potential losses, and financial regulators are closely monitoring the situation.

A year after the collapse of Silicon Valley Bank, a survey by investment technology provider ICD revealed that corporations in the Americas, Europe, the Middle East, and Africa are still concerned about counterparty concentration risks and bank failures. The banking turmoil has had a lasting effect on corporates, with many changing risk policies and reducing investments in demand/bank deposits.

The Federal Reserve has called on banks to improve their counterparty risk management protocols, emphasizing the need for reliable and comprehensive information about their counterparties. The collapses of Archegos Capital Management and SVB have highlighted the importance of effective risk management tools and industry-wide reforms to reduce risks for banks.


Information for this story was found via CNBC, Fortune, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

One Response

  1. I like it how the narrative is slowly changing from ‘inflation is transitory, we don’t need to raise rates’ to ‘raising rates doesn’t work anyway, so we might as well cut them’.

Video Articles

Goliath Resources Hits 10.60 g/t Gold Over 22.82 Metres, Highest Grade Results In Third Distinct Rock Package At Surebet Discovery

Four Countries Control the Fertilizer That Feeds the World | Sage Potash

$10,000 Gold Is Just A Question of Time | Florian Grummes

Recommended

Nord Precious Metals Identifies 29 Veins At Castle East Following 3D Modeling

Emerita Resources Expands El Cura Drill Program By 10,000 Metres As Deposit Remains Open For Expansion

Related News

OSFI On Easing Mortgage Underwriting Standards: “We Will Not Do That”

Amid the calls to loosen mortgage-underwriting standards in Canada, the Office of the Superintendent of...

Friday, September 9, 2022, 03:56:00 PM

Toronto Housing Market Unfazed by Pandemic, Sales Record Set in July

The housing market in the Greater Toronto Area appears to be triumphant throughout the economic...

Sunday, August 9, 2020, 11:41:00 AM

Mall Landlords Across the US Filing for Bankruptcies Amid Brick-and-Mortar Apocalypse

Over the weekend, two major US mall landlords filed for Chapter 11 protection, joining the...

Monday, November 2, 2020, 06:17:00 PM

Toronto Tightens Rental Rules With Anti-Renoviction Measures

Toronto City Council has approved a new bylaw aimed at protecting tenants from fraudulent renovation-based...

Wednesday, November 20, 2024, 02:11:00 PM

Colliers Canada Survey Reveals 16% of Commercial Tenants Were Unable to Pay May Rent

Colliers International, a Canadian-based global commercial real estate organization, has released recent data regarding the...

Tuesday, June 9, 2020, 05:12:00 PM