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Comment by evgen | Hacker News Reader

It appears that the only thing that has declined here is the free money support for the fantasy valuation being claimed by the REIT. There are a lot of reasons that hundreds of billions in commercial real estate loans are going to be written off in the next few years and the original article mentioned none of them...

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Apparently it wasn't a fantasy valuation because the banks lent against it. It is now a fantasy valuation because the properties have massively declined in value.

Banks loaned subprime mortgages, enough actually to tank the global economy. Banks loaned for Musk's Twitter purchase. Free money tends to move the risk assessment done by banks in not a good way. Just ask SVB.

FWIW, SVB didn't go broke because of subprime loans. They had a bank run.

They mismanaged their risk. You make it sound like they did nothing wrong.

Can the other banks handle the same thing that happened to SVB?

From memory, yes. At least better, since SVB had an unusual high amount of uninsured deposits and Edit: other banks have more short term investments to cover withdrawls that were marketed to market, meaning they were more like cash equivalents than the long term stuff SVB had to sell at huge losses. And those losses kind of killed SVB.

If it’s a fantasy valuation then was the government collecting property taxes based on those fantasy values?

There's even more reasons that interest rates won't stay this high for long enough to matter.

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