SVB analysis reveals 186 US banks well positioned to fail

A perfect mix of losses, uninsured leverage and a larger loan portfolio, among other things, led to the collapse of Silicon Valley Bank (SVB). When comparing SVB’s situation with other operators, it was revealed that almost 190 banks operating in the United States are at risk of being forced out.

Although SVB’s collapse reminded us of the fragility of the traditional financial system, a recent analysis by economists showed that many banks are nothing more than uninsured deposit-takers after a disastrous collapse. It said:

“Even if only half of uninsured depositors choose to withdraw, nearly 190 banks are at risk of harming insured depositors, with potentially $300 billion worth of deposits at risk.”

Monetary policy set by central banks can have a negative impact on long-term assets such as government bonds and mortgages, which in turn can cause losses for banks. The report explains that a bank is considered insolvent if the market value of its assets – after all uninsured depositors have been paid – is insufficient to repay all insured deposits.

Largest insolvent institutions if all uninsured depositors are active. Source:

The data in the chart above represents funds based on bank call reports in the first quarter of 2022. Along with SVB ($218 billion in assets), the banks in the upper right corner have the most severe asset losses and the largest available uninsured deposits. – assets at market price.

The recent rise in interest rates, which reduced the market value of the US banking system’s assets by $2 trillion, combined with a large share of uninsured deposits in some US banks, threatens their stability.

“Recent declines in bank asset values ​​significantly increased the vulnerability of the U.S. banking system to uninsured depositors,” the study said.

Related: Breach: SVB Financial Group files for Chapter 11 bankruptcy

As the federal government steps in to protect depositors at SVB and Signature Bank, President Joe Biden assured that it will not affect taxpaying citizens.

However, many pointed out to Biden on Twitter that “Everything you do or touch costs the taxpayers!”

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