Last year was a bleak one across the banking industry. In the first half, dozens of regional lenders swooned — and some collapsed — as rising interest rates slashed the value of assets on their books, saddling US banks with hundreds of billions of dollars of unrealized losses. Some lenders started raising the possibility of defaults on commercial real estate loans, and the problem has yet to subside, with New York Community Bancorp getting a cash infusion this month amid property-loan troubles of its own.
Bank of America Corp’s Chief Executive Officer Brian Moynihan said it’ll take time for the banking industry to work through issues with commercial real estate loans, after a New York regional lender alarmed investors with its exposure to troubled debt.
“Commercial real estate is a slow burn — it’s a classic burn,” Moynihan said in a Bloomberg Television interview Tuesday from the bank’s trading floor. “The trading attitude, which is these assets have to move at a price tomorrow morning, isn’t the way the banking system works.”
