Banks have slowed their lending for commercial real estate deals in anticipation of financial instability, and that has greatly affected the industry, Willy Walker, the top executive of one of the largest financial brokerage shops, told CNBC.
During an appearance last week, Walker, Chairman and CEO of Bethesda, Maryland-based Walker & Dunlop, said the slowdown in lending has had wide ramifications.
"And so them pulling back in the commercial real estate sector right now has made it so that the entire, if you will, chain has stopped moving," Walker said on CNBC's "Squawk on the Street" show. "And so you can’t get warehouse lines right now. You can’t get syndicates to go and syndicate loans. And so as a result of that we’re getting a real pullback from lending from the major money center banks. And that has basically slowed down the entire financing system."
Walker added that large commercial banks are acting preemptively, given the current status of the commercial real estate loans on their books. They've pulled back on lending, even though defaults aren't acute, he said.
So, Walker added, banks are "bracing for something to happen, but it certainly has not started to happen. From an overall credit standpoint, it’s an incredibly clean book."