The Federal Reserve's Board of Governors have made it clear that while they think the "banking sector remains sound overall," there are problems, according to the November 2023 Supervision and Regulation Report. One of the troublesome spots they called out was bank lending to commercial real estate.

"The banking system remains sound overall. Banking organizations continue to report capital and liquidity levels above regulatory minimums," they wrote. "Earnings performance has remained solid and in line with pre-pandemic levels, despite recent pressure on net interest margins. Deposit declines related to the March banking stresses have slowed. Loan delinquency rates remain low overall.

"However, delinquencies for CRE and some consumer sectors have increased from their low levels, and banks have increased credit loss provisions. Liquidity and interest rate risks also remain elevated for some banks, partially attributed to the increased funding costs and significant fair value losses on investment securities."