The 'reserves' are just money they put away for bad loans. All this means is that they'll have some quarters of lower profits, NOT that they're going bankrupt.

[–] Ghostalmedia@lemmy.world 5 points 9 months ago (2 children)

Perhaps. But my guess is that this ain’t going to be a “few quarters” thing. More people are working remote and we just don’t need commercial office space like we did 5 years ago. Things have radically changed, and many companies are bailing on their leases as soon as they come to the end of their term. And commercial leases are often 3 to 10 years. So people are going to be bailing from those over the rest of this decade. That risk of large loan default could continue to increase.

[–] czardestructo@lemmy.world 3 points 9 months ago* (last edited 9 months ago) (1 children)

Bingo. My company sub-leased some downtown office space to get out of it and will bail on it completely in about 5 years when the lease expires.

[–] Ghostalmedia@lemmy.world 2 points 9 months ago

Yeah, same story for my company and just about all of my friends with white collar jobs. Most offices that lease property are downsizing and consolidating their spaces. Most of the people trying to use their offices are the big tech giants who actually built and own their campuses outright. Everyone else just sees a giant waste of money for very little productivity gains.

[–] festus@lemmy.ca 1 points 9 months ago* (last edited 9 months ago) (1 children)

Yeah, I don't disagree that these loans are going to cause trouble for a long time, but I disagree with the headline implying these banks can't meet their deposits.

I think that, over the next decade, many of these commercial buildings will undergo retrofits (say to turn them into housing) which will help the owners / lenders recoup much of the costs.

[–] Ghostalmedia@lemmy.world 1 points 9 months ago

IMHO, I need context for the risk numbers they’re throwing around. I don’t have enough information to make a call one way or the other.

What should a healthy bank, that is doing right by its clients, have in reserve? What does the trend line for reserves look like? What is going to happen if banks are sitting on a bunch for foreclosed office buildings that are cheaper to demolish than to redesign into housing? If banks take a giant unexpected loss on a formerly safe investment, what does that do to the other customers using other financial products?

[–] Tremble@sh.itjust.works 1 points 9 months ago

Lower profits means death