CNN — Wall Street is experiencing a case of déjà vu.

It’s been nearly a year since the collapse of three US regional lenders left financial institutions and regulators scrambling to prevent the spread of a banking crisis. Today, investors are worried they’re back on familiar territory.

But while the last crisis was all about interest rate risk, this one revolves around the $20 trillion commercial real estate market.

What’s happening: After decades of growth bolstered by low interest rates and easy credit, commercial real estate has hit a wall.

Office and retail property valuations have been falling since the pandemic changed where people live and work and how they shop. The Fed’s efforts to fight inflation by raising interest rates have also hurt the credit-dependent industry.

That’s bad news for regional banks.

US banks hold about $2.7 trillion in commercial real estate loans. The majority of that, about 80%, according to Goldman Sachs economists, is held by smaller, regional banks — the ones that the US government hasn’t classified as “too big to fail.”

Much of that debt is about to mature, and, in a troubled market, regional banks might have problems collecting on those loans. More than $2.2 trillion will come due between now and the end of 2027, according to data firm Trepp.

Fears were exacerbated last week when New York Community Bancorp (NYCB) reported a surprise loss of $252 million last quarter compared to a $172 million profit in the fourth quarter of 2022. The company also reported $552 million in loan losses, a significant increase from $62 million the prior quarter. The increase was driven partly by expected losses on commercial real estate loans, it said.

Shares of the bank have plummeted nearly 20% over the past five trading sessions and fell an additional 11.2% on Tuesday morning. The US Regional Bank index dropped by about 5.2% over the same period.

Fear also spread overseas. Japan’s Aozora Bank said last week that bad loans tied to US offices were partly to blame for its projected annual loss of 28 billion yen ($190 million) last year.

My colleague Anna Cooban reported last week that Germany’s biggest lender, Deutsche Bank, said it had allocated €123 million ($133 million) during the last quarter to absorb potential defaults on its US commercial real estate loans. That’s more than quadruple the amount it set aside during the same three-month period in 2022.

Some companies are even selling off their once-valuable properties for bargain bin prices. The Canadian Public Pension Investment Board recently sold a 29% stake of an office block in midtown Manhattan to Boston Properties for just $1. The pension fund had invested $71 million in the building.

The Financial Stability Oversight Council, of which Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and US Securities and Exchange Commission Chair Gary Gensler are members, released a report last December that cited commercial real estate as a major potential financial risk.

“As losses from a [commercial real estate] loan portfolio accumulate, they can spill over into the broader financial system,” they wrote. “Sales of financially distressed properties can reduce market values of nearby properties, lead to a broader downward CRE valuation spiral, and even reduce municipalities’ property tax revenues.”

Risk of contagion: Yellen, meanwhile, is set to testify before the House Financial Services Committee at 10 a.m. ET on Tuesday about the aftermath of last year’s regional banking crisis.

She’s got a tough job; she’ll need to reassure lawmakers and Americans that the banking system is safe while acknowledging the very real risks of a commercial real estate-driven crisis.

Powell also addressed the issue during an appearance on CBS’ “60 Minutes” Sunday evening.

“There’s some smaller and regional banks that have concentrated exposures in these areas that are challenged and we’re working with them,” he said. “It feels like a problem we’ll be working on for years. It’s a sizable problem. It doesn’t appear to have the makings of the kind of things that we’ve seen sometimes in the past, for example, with the global financial crisis.”

But, Powell added, “There will be some banks that have to be closed or merged out of, out of existence because of this. That’ll be smaller banks, I suspect, for the most part.”

McDonald’s says Middle East turmoil is hurting its business

McDonald’s said on Monday that growing tensions in the Middle East have hurt its business.

The burger chain, which reported growing overall sales and earnings last quarter but missed on Wall Street expectations for the first time in four years, noted that the tensions were weighing on the region’s sales, and the company is monitoring the evolving situation.

The Middle East doesn’t make up a huge part of its overall business, reports my colleague Jordan Valinsky. McDonald’s for the most part licenses its brand to independent companies in the region, and McDonald’s said it provided some financial assistance in the form of royalty relief or deferred cash collection.

McDonald’s noted that it provided an insignificant amount of financial assistance for franchisees impacted by the war in the Middle East. But sales in its licensed markets business, of which most Middle East companies are a part, grew just 0.7% in the last quarter, as a result of the tensions. That was far worse than the more-than 4% growth in the United States and other international businesses.

A year ago, the licensed markets business was its best-performing unit, with more than 16% sales growth.

Landlines could soon be a thing of the past

More people who are still using telephone landlines will soon need to decide if they want to finally hang up on their service, reports my colleague Samantha Murphy Kelly.

Just last week, AT&T applied for a waiver that would allow it to stop servicing traditional landlines in California. AT&T and Verizon previously stated they want to be fully operational on newer infrastructure within the next few years.

That’s part of a sweeping move by phone service providers to replace older copper wire-based telephone systems lines, also known as Plain Old Telephone Service (POTS), with faster and more advanced technology that doesn’t work with landlines.

Providers worldwide are shifting toward offering fiber optics and ethernet access and retiring older equipment, including the copper wires themselves. The process is also currently underway in France and the UK.

Consumers will have to decide whether to give up their landlines or potentially face higher costs because of complex, expensive workarounds from the phone companies. The alternatives might not be as reliable as old-fashioned landlines either, and the process of switching the old equipment for the new could be a massive undertaking.

“We’ve seen a precipitous decline in demand for telephone services provided over our copper networks,” an AT&T spokesperson told CNN. “We are focused on enhancing our network with more advanced, higher speed technologies like fiber and wireless, which consumers are demanding.”

The spokesperson added that AT&T is “not canceling landline service in California” and none of its customers will lose access to voice service if the waiver application is approved by the California Public Utilities Commission.