Banks are facing major financial repercussions from the LA wildfires

The news: By destroying thousands of homes, schools, and businesses—forcing around 200,000 locals to evacuate and killing at least 27 people—the LA wildfires have caused $250 billion to $275 billion in damages. That’s over 6% of California’s GDP, per American Banker. But these aren’t the only costs that’ll impact banks in the future.

What this means for banks: These wildfires will continue to wreak financial havoc for years to come. That’s because:

• Many homeowners struggle with inadequate insurance, leading to difficult decisions about abandoning properties—and therefore their mortgages. Rising defaults put financial institutions (FIs) at risk.