An analysis conducted by SVB has revealed that 186 US banks are in a precarious position and could be vulnerable to collapse.
An increase in interest rates, which caused the market value of assets owned by American banks to decrease by $2 trillion, along with a considerable portion of deposits in certain U.S. banks not being insured, poses a danger to their security.
Silicon Valley Bank (SVB) is facing a decline due to a combination of losses, uninsured leverage, and a larger loan portfolio. An analysis of other banks in the United States shows that nearly 190 of them face the potential risk of a run. SVB's situation reveals that financial institutions are still vulnerable to the shifting economic landscape, and the potential threats that come with it.
“Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk.”
According to a recently released bank call report, banks in the top right corner of the graph have suffered the most severe asset losses as of Q1, 2022. SVB, with its $218 billion in assets, has the highest amount of uninsured deposits to mark-to-market assets, making it the most susceptible to potential losses. While the overall financial industry is showing signs of improving stability, these banks remain in a precarious position. It is likely that these banks will require additional capital in order to prevent further losses.
The U.S. banking system is facing a serious threat to its stability as recent interest rate hikes have caused a massive decrease in market value of assets to the tune of $2 trillion. To make matters worse, a large portion of deposits at some U.S. banks remain uninsured. This presents a significant risk to the financial sector, leading experts to call for increased regulation and oversight. With the future of the banking system uncertain, the public is urged to stay abreast of the latest developments.
President Joe Biden has stepped in to ensure the financial security of depositors in SVB and Signature Bank, while also reassuring taxpayers that they will not be impacted. During a news conference on Wednesday, Mr.
Thanks to actions we've taken over the past few days to protect depositors from Silicon Valley and Signature Banks, Americans can have confidence that our system is safe.— President Biden (@POTUS) March 13, 2023
People’s deposits will be there when they need them – at no cost to the taxpayer.
Following former Vice President Joe Biden's pledge to donate his salary as President to charity, many responded to Biden on Twitter, reminding him that "everything you do or touch costs the taxpayer!" Biden has not yet responded to the comment, but his promise to donate his Presidential salary to charities in need serves as an example of his commitment to civic duty.