The most in cities. Haul supportto efforts halt support efforts. Money, city save budgets are being stretched. Many workers are working from home or unemployed, but it is not just city budgets, you have financial is supporting the cities you have Financial Institutions supporting these cities. Joe we know that all the regional banks are not doing great, but the ones exposed new york city are the most in trouble because they have unique issues dealing with new york and its future and fiscal sustainability. Here is how much the bank is backing commercial real estate. You see the big names like wells fargo, but also lesserknown names like signature bank, and for them, new york city is a big part of their stock. Romaine see the amount of lending out there. M down 42 over the past year. Yougo down the list and will see similar returns for all the banks that i have marked in the new year new york region. Joe hannah, thank you for joining us. Of the the sense exposure relative to the size of the bank overall, like signature k, how many of these are depend on the future of new york . Nnah the majority of their loans are tied to the new york City Property market. When you are talking about everything that is happening in new york these days, and the tostions from retail existential questions about the future of office space, these are the banks you are looking to because of the concentration they have. Caroline it is impacting them exactly how . We see share prices hammered. Are we feeling it in a tangible way at the center of the banks right now . Hannah that is a great question. There is so much stimulus in the system and measures taken by the lenders themselves at the start of this. In ahese lenders, they are talked the ones that we about, large and small across the country, boosting the reserves in the first half, you have hundreds of millions set aside from loan offices, the question remains what it looks like and will it be enough . Romaine what does it start to look like with the actual performance of these banks . Any sort of potential consolidation of the industry it is reflected in the share prices, but we have not seen it afflicted in the Balance Sheets yet. Hannah great question. What my sources are saying is that it will really be a Fourth Quarter and into the next year question. These things do not play out weekly historically. It will be no different now do not play out quickly, historically. It will be no different now. Reallyen it comes to valuing any of these assets, it is superhard. There is almost no transaction, nonexistent. Is it really sort of a matter of, we do not really know what the impairments are going to look like until we have a much greater sense of what we can start to say, ok this is normal . Hannah exactly. There is a domino effect that happened where you get this debt and thosety sales people need to readjust their pricing and lenders will not lend at the same price and that impacts the whole market. That has not happened yet where we are today. Bit has there been any offset by trying to understand the way in which the lab will lie in 2021 and 2022 . Ah great question. The two we are focused on are in the new york city area, but then you are looking at wells fargo, a banking giant, and they were the most active lender in the city for the first half of the year, but they have a more ersified folio across portfolio across regions, even across the entire country that leads them a bit more. Nflates them a bit more romaine everything had to be built as offices combined with apartments, i am wondering does that exasperate exacerbate the situation, or a buffer for these lenders out there . Hannah that is a great question. Uses about what these mixed tendencies are. If you have a hotel with something that depend on the Tourism Industry on the ground floor, than that definitely is not going to go as far. It is definitely an option. Romaine hannah, great reporting as always. That is Hannah Levitt there. We will continue this conversation. I will learn to pronounce exacerbate. We will bring in christopher mcgratty. This is bloomberg. Romaine back. Today, welcome back. Joe, i would think to some extent, you look at the stimulus money washing around out there. People buying houses. Is this not helping . Short i amt this about to show of the new homes sales number. It is ridiculous. You cannot even call it a vshaped recovery. These better than a v. You would never it is not what you would expect to see during an economic downturn. You would expect banks to be doing better in an environment when so many people are borrowing money for big ticket purchases. Caroline what is interesting is the flipside. We were talking to an economist yesterday saying that this is a perfect storm right here right now. He was focusing on las vegas. How much the supply has caused this upheaval in prices. Next year will be so out. We will start will be so ugly. We will see foreclosures, losing their jobs. What that means for the Home Building and buying scenario, it is going to be painful. Joe it is hard to see this continuing. Lets talk about it more from the bank side. I want to bring in christopher mcgratty. Us. S, thank you for joining broadly speaking, financial stocks are one of sectors that have really lagged. If you look at the regional banks, they have done worse than the big banks. What is it specifically about this environment in a time where there are tailwinds that invested investors are so down. Chris there are two factors. The first is credit quality. We are going through an unprecedented situation with credit. The first thing that is impacting the angst is credit policy. The second is interest rates. In response to the credit problems, it is creating a structural challenge for banks. You are getting hit on both sides. Romaine talk more about the Net Interest Margin here. We saw the big bank tried to navigate this. Obviously, the big banks are broader so they have something to buffer them. Have they done anything to blunt the impact . Chris the bigger banks have the most impact on the market. There is momentum from the first half of the year. For the smaller banks, which is your question, there revenue mix is much more concentrated. At 75 80 tied to the yield curve. Compressing, so small banks, because of lack of diversification or being hit harder are being hit harder. Caroline we are talking about how hard hit those in new york city have been. Portfolios being more diverse in places that are less hardhit, whether this will be reflected in the net share prices . Chris new york is the epicenter of the problem. A lot of the stocks new york had been hit 50 to date. That will recover, no doubt. You will see an extended work out in new york. Outside of new york, the unique part of this pandemic is no one is immune. If you want to think about relative exposure, commercial lending is going to be hit hard and the hardest. We have talked about lower interest rates, affecting borrowers at their lower monthly payments, and we have seen borrowing pickup. Joe one of the things that got attention was the ppp program, there was a lot of praise about how Community Banks did in managing that program, arguably better than the major banks. Did that turn out to be investors are looking through it because they were temporary . Chris it has been a huge success. The economic transactions have not changed. The revenue recognition has been pushed out. When the program was written, we thought it would come into the second or third order quarter. While they are transitory earnings, they are capital. The industry entered this pandemic with record capital levels and these fees will only add to that. Speak to any you consolidation that we will see because of this . Heading into this, i think it was pretty healthy. It was an active rate. Has come down. They are trying to estimate how big of a loss it is going to be over the next couple years. Because of that, there is probably not a lot of consolidation for a few more quarters. Having said that, on the back of this, i think this has opened up eyes for the need to consolidate further. There are still thousands of ranks in the country banks in the country. Create a majoro revenue issue in the banks and one of the ways to combat it is to do an acquisition and extract costs on the institutions from the institutions. Romaine one thing that has come up a lot prior to covid19 was a lot of competition from nontraditional financial Type Companies that were trying to make it easier to get mortgages and other types of financing. I am curious if we see investment by the regional banks and their technology in their petechnology. Chris that is a great question. The view was that the nonbanks were going to take over the banks. It is a real value in the climate crisis. I think you will see more partnerships. Thanks partnering with nonbank thanks partnering with nonbanks. If you think about where banks are investing, we are not going to branches anymore. That will continue to be consolidated at the bank level. Chris mcgrady christopher mcgarity, thank you. For thes that mean environment, sustainability, and more . We will discuss that next. This is bloomberg. Caroline we are focused on the Financial Stress placed on cities. The threat of mass migration of people out in the suburbs so far is interesting and showing that people have moved less so far. A is backward looking. If you look at the biggest cities in the u. S. , particularly new york and san francisco, rents are getting depressed. Across alldecline different categories in sizing. There is less demand right now to live in cities for obvious reasons, due to the virus and opportunities to work from home, etc. We will see how this shakes out, but there is a reason why there is a concern over sustainability of cities as believe as people leave. Andine the idea of density s withtion density, deal issues like housing affordability, climate, so when you see that unraveling, it will be interesting to look at liquidations. Been an mantra a mantra that density is good, whether it means better productivity or better for the environment. How concerned are people if this longterm trend starts to reverse . We do not really know how durable this trend is. Peoplecant numbers of are leaving in san francisco, l. A. , moving to the suburbs, and the on and beyond. The real estate markets in these places is redhot right now. It might feel like back to nature in a way, living in the trees and the mountains, but in fact, this is an eco night mare. Suburban sprawl is the last thing that the planet needs right now. Caroline that is interesting. I feel that many feel that going into nature is better, but of course people jump into their cars to drive in. What do we see in covid really hits when covid really hits . New jersey was hit because of the mass commute that goes into new york city. What does that mean for future pandemics if it does not spell good things for the climate . Andy if all these people were living cities leaving cities and riding their bicycles everywhere, that would be fine. But they are not. They are driving everywhere and nothing in much bigger houses that take more energy to be cool. Much of the footprint is houses and cars. You need denser cities. Most particularly, in the emerging world, think elevators, not cars. Think small condos, not ranch style homes. People say, well, density is thebecause it encourages spread of covid. This is complete nonsense. Hong kong, which is way more dense than new york, has had only a handful of covid deaths. Romaine that is a great point. It also raises the issue of the disparities and how various nations and cities decided to fight covid19. I guess that is a conversation for another day. If you do not have the general society to address those issues, then i dont know, what is the trajectory here . A lot of people would point to new york and say we are going down a different path. Andy the more interesting ideas are coming out of europe and parts of asia. It is encapsulated in an idea of a 20 minute city. Paris is at the center of this. The idea that you deconstruct your cities and create smaller communities where everything is within a 15 minute walk or bicycle ride or clincs and shops. This is the way to reduce car numbers. This is to how to ease this is how to ease transport. When you think of housing construction, then you are starting to address this issue of inequality, one of the deeper causes that makes societies, including new york, more vulnerable to pandemics. Joe i love your comparison of car rides to elevators, thinking of someone going from the 20th floor down to the ground floor as their daily commute as opposed to a 30 minute car ride. Unfortunately, the u. S. Love affair with the skyscrapers peaked in the 1920s and 1930s. You had urban development through sprawl. 40 of the urban footprint. We need to come back to the cities and free of more land. Need to build higher, not broa der. All kinds of policies need to come together. Caroline what do we learn from china that faced this pandemic before us . Do they have urban sprawl and people moving out and coming back in . Right big have the idea. They are creating megacities. Unfortunately, these cities are way too spread out, so they are building in beijing, a monster that will have 120 million people. A monster housing project. Every apartment they sell, they also have a task. Caroline have to leave it there. T is it from you can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save up to 400 a year on your wireless bill. With the carrier rated 1 in customer satisfaction. Call, click, or visit your local xfinity store today. Emily welcome to bloomberg technology. Im emily chang. Stocks down today but tech shares helping lead the way back into the green. 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