Spectre of default haunts US banks

The Covid-19 pandemic is almost gone, but it is still haunting the US real estate sector and its banking system. Large office buildings, vacated right after the outbreak of the deadly virus, are still empty as the work-from-home model has been increasingly adopted, causing hefty losses to owners of high rises and making it impossible for them to repay bank financing. In another crisis, the eruption of Russia-Ukraine war in February 2022 triggered a spike in inflation across the world, which forced scores of central banks including the US Federal Reserve to jack up interest rate to record highs. This deepened the real estate and banking crisis in the world’s largest economy, which has long been a champion of capitalism. The real estate-driven financial turmoil has taken its toll on a number of regional and small banks in America and has also badly shaken large financial institutions but they are believed to have survived the crisis.