Gradually, and then suddenlyWe are just starting to see a bit of the "commercial real estate junk bond" which is similar to the 2007-2009 "residential real estate junk bond".
Below example:
A bank has loaned say 200 million to fund an outdoor mall. The mall is built but since the planning and development stage and then the build out and completion phase the market has shifted to more on-line stores and smaller versions of larger stores with more limited inventory.
Now the mall owner has upkeep, taxes and payments on the 200 million. He is renting space but not at the amount which makes profit which is what business is about. He is thinking about selling but since the numbers do not meet what a buyer is looking for (profit) they are only willing to buy the 200 million dollar mall for 100 million. (The amount which the property would currently pull a profit) The bank is facing 100 million lose on the property off the books. The bank cannot get out of the property what it has invested in it.
What seems to be happening is the bank then loans another 50 million to the property owner on the value of the mall. So the property now has a bank loan value of 250 million when in fact todays value of the property is 100 million. The property owner has money to pay the loan and a amount of time to make it profitable.(zombie property like zombie company) The bank keeps the property out of foreclosure and instead of a 150 million dollar lose the property is on the books as a 250 million dollar asset.
If this happens once per bank then that is business and we go on. If that bank was highly invested in many of these deals then when the card's finally fall )the 50 million runs out) then there is a huge book loss and since many banks money is leveraged like 10-15 times the book amount the bank cannot meet it's obligation and goes up for sale to the next bigger bank upstream who can weather the market a bit longer.
I am sure I did not write this well as I am not a banker and the terms I use are prolly more suited to a working man's knowledge. But you get the idea.
The bank loan money to save asserts from becoming liquidated losses which hurts the books and gets the feds involved.
Enough let's just say I do not think that all banks are solvent at the moment. Many are just as zombie as the zombie companies and zombie properties.
I don't think the OP was wrong just might have Been zombies on the time frames.