2min chapter

Forward Guidance cover image

Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO

Forward Guidance

CHAPTER

The Risks of the Credit Cycle in Commercial Real Estate

I don't know if this is alarming or reassuring, but all of these issues we've had with the banking system have occurred before the credit cycle has really started. So many banks report a charge off rate or a provision for loan losses of very, very, very low amounts. I think you'll see well managed banks actually increase their deposit, their loan reserves to prepare for the credit cycle. That would be my guess. You've already started to see it to some extent. It's not alarming at this point because it's old hat. We're close to two and a half, three months into this. And I think banks reoriented their operations in the month or two after March.

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