Rising office vacancy rates and the Federal Reserve's rapid interest rate hikes pose a threat to regional banks due to their significant exposure to commercial real estate (CRE) loans. Data indicates that smaller banks hold nearly 70% of CRE loans, with some banks' CRE loans averaging nearly 35% of their total assets. This situation has led to concerns about a potential systemic credit event, with 16% of investors surveyed by Bank of America considering it the biggest tail risk for 2024. New York Community Bancorp (NYCB) experienced a 60% stock drop after reporting a quarterly loss and cutting its dividend, highlighting the sector's vulnerability. However, there may be some relief as interest rates are expected to decrease, and corporate bosses are recalling staff to offices, potentially reducing vacancy rates.