Grant Cardone: $2.7 Trillion Debt Could Kill 300 Banks — How This Affects You
Written by
Brooke Barley
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Amen Oyiboke
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Prominent businessman and real estate investor Grant Cardone recently warned in a TikTok video that the $2.7 trillion loan default debt looming over commercial real estate could wreak havoc on American banks and consumers.
The debt has been growing exponentially since the pandemic, when many businesses decided to go fully or partially remote, killing the need for office space in the process. According to Cardone, these trillions in debt could cause 300 banks to fold and government pensions to be eliminated.
Cardone pointed out that all of this is bad news for real estate owners paying off their loans. He’s been using cash to close his deals and saying he’ll continue to do so until interest rates drop.
Here’s how, even if you’re not a real estate holder, this debt can still have an impact on you, according to financial experts.
Obtaining a Loan Might Be Harder
Since banks are seeing so many defaulted loans, they may be less likely to extend them in the future. Finance expert Abigail Wright, the senior business advisor at ChamberofCommerce.org, has seen the ramifications of defaulted debt before.
“If banks themselves lose money on bad real estate transactions, they become nervous. Nervous banks don’t lend as much,” said Wright. “This means that when your parents want to purchase a house, or an entrepreneur wants to open a business, the bank will say no, or provide a loan at a higher interest rate.”
Some Jobs May Be Eliminated
Wright warned that commercial real estate debt like this could lead to layoffs. “Commercial real estate is not only about buildings, it impacts builders, real estate agents, office workers, and many others. When companies don’t build or lease offices, those occupations may become obsolete.”
The effects wouldn’t end there. Aaron Razon, a personal finance expert at Coupon Snake, warned that those who are unemployed might have a tougher time getting back on their feet because of this debt fallout. “Increased unemployment isn’t the only potential consequence to consumers, but also reduced access to financial services, disruptions in payment systems, slower economic growth, and potential instability in the entire financial system,” Razon said.
Consumers Will Spend Less
Without the ability to get a loan and or a job, Wright said it’s very likely that individuals will start tightening their belts. “People worry when they hear banks are closing. And when they worry, they don’t spend. They may postpone vacations, buy less, and put off major decisions. This impacts stores, restaurants, and other businesses that I meet on a daily basis.”
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