It’s the small and medium sized banks, especially those with big commercial real estate risk, that are most at risk now. Four more banks went down yesterday.
It’s difficult to see how the economy will improve much if banks keep failing. And they will. At least for a while.
One of the banks that failed is in Temecula, CA. It’s in a semi-arid desert, distant from the major metro areas of southern California. People who bought homes there did so because they could afford to buy one closer to where they worked. It’s basically a bedroom community where people have hellish multi-hour commutes to work. So, if real estate blows up, there’s not much to keep people there.