Already 722 banks in the United States have notified the country’s Federal Reserve of unrealised losses that exceed half of their capital. More than 30 of the banks on this list are close to catastrophic, with losses exceeding 85% of their capital.
cont.ws
In the current environment, the rate of withdrawals from US bank accounts by individuals is growing, approaching the 2008 figure. Against this background, a banking crisis in the US seems imminent.
Earlier, the US Federal Reserve raised its benchmark interest rate once again in order to fight inflation, which rose to 9% in 2022 with a target level of 2%. This rapid increase in US Federal Reserve rates has significant negative consequences.
“Higher interest rates lead to significant unrealised losses in investment securities and, in some cases, reduce the value of real capital,” the Fed report said. – As interest rates rise, banks with large losses in market value could face growing financial and risk-management problems.”
The data show that the three US banks that collapsed this year – First Republic Bank, Silicon Valley Bank and Signature Bank – “weighed more” than the 25 that collapsed in the 2008 crisis. Their combined assets were $532bn, more than the inflation-adjusted $526bn owned by those that collapsed in the Great Recession.
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