đ„đ„đ„ WARNING BELLS ARE RINGING đ„đ„đ„
UNREALIZED LOSSES IN US BANKS ARE 7 TIMES THAT OF THE 2008 CRISIS: IS IT A NEW CRISISâ
US banks are facing a debt crisis that will overshadow the 2008 financial crisis. Unrealized losses on banks' balance sheets have reached $517 billion. These losses are due to the loss of value of long-term bonds and mortgage-backed securities held by banks due to interest rate increases. Unrealized losses are realized when these assets are sold, and banks are forced to record these losses when they experience liquidity problems.
The collapse of Silicon Valley Bank (SVB) in particular has highlighted the great risk that such losses pose. The Federal Deposit Insurance Corporation (FDIC) has declared 63 banks at risk. While interest rate hikes and inflationary pressures are severely limiting banksâ profitability and lending capacity, even the emergency liquidity measures implemented by the Federal Reserve may not be sufficient. The levels of borrowing seen in the 2008 crisis are considerably lower than those seen today.
As a result, these growing problems in the U.S. banking system pose serious risks to the financial system and have the potential to turn into a global crisis.
References:
âą U.S. Banks Suffer Record Losses, Reaching $512 Billion in Unrealized Losses, ETHNews âą U.S. Banks on brink of collapse? $517 billion losses threaten 63 banks, Finbold âą Scale of US banksâ unrealized losses, distressed borrowing & central bank actions point to wider problems, Thomson Reuters Institute
