The largest banks, about which the Fed is concerned, probably will have less exposure to city-specific commercial real-estate. And if they do, the Fed will make sure there’s a dozen programs available to bail them out.
The same can not be said for local or medium size banks.
If one of them gets into trouble, the Federal Reserve will be there to help them buy up the assets for pennies on the dollar.
Just look at JP Morgan’s buy-out of First Republic. 80% of losses were guaranteed by Fed.gov (ironically, not the Federal Reserve)
It pays to be a member of America’s oligarchy.
Losses? They’re making tons of money on that deal.