Billionaire real estate investor and CEO of Starwood Capital, Barry Sternlicht, recently stated his expectation of one bank failure per week in the United States. Indeed, Sternlicht raised concerns about more than 4,000 banks in the U.S. amid continued pressure from interest rates and inflation.
Sternlicht noted that community and regional banks could face a treacherous time amid a host of macroeconomic factors. He then noted that a regional bank could fail all at once “any week, maybe two a week.” recent interview with CNBC.
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Billionaire real estate investor expects problems with the banks
Throughout the year, the United States has faced an economy that has become increasingly fragile. The Federal Reserve had waged a two-year tightening campaign, raising interest rates to combat high inflation. The Central Bank has not yet lowered interest rates, resulting in many dangers for the economy.
One of them is billionaire real estate investor Barry Sternlicht, who expects one bank failure per week. Speaking to CNBC, the co-founder of the $115 billion Starwood Capital Group shared his gloomy forecast for the current state of interest rates and their effect on smaller banks.
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“I think people are looking for these cracks, and you're going to see the crack developing now,” Sternlicht said. “You're going to see a regional bank fail every day, if not, every week, maybe two a week,” he added.
2023 saw the much-publicized collapse of First Republic Bank. The institution, a regional lender in the Northeast, had nearly $6 billion in assets and $4 billion in deposits. Indeed, the bank was the first victim of what could be many as a result of high interest rates on major real estate investments.
Sternlicht was a consistent voice discussing the worrying effect that rising interest rates would have on real estate and banking. In 2022, he was among the first to recognize the inevitability of a recession for the US economy as it first began its tightening campaign.