With the closure of Silicon Valley Bank and its parent company filing for bankruptcy, more than 190 U.S. commercial banks may close.
The parent company of SVB also recently filed for bankruptcy. The SVB incident reflects the fragility of traditional banking structures.reportAccording to economists, a number of banks have withdrawn their unsecured deposits after the SVB closed.
“Despite the removal of half of the unsecured deposits by nearly 190 banks, it has the effect that could put more than $300 billion of secured deposits at risk.”
The central bank’s monetary policy also affects assets such as government bonds, various mortgages in the long term, causing commercial banks to lose.
According to the report, the bank would be deemed bankrupt if the market value of its assets (Mark-to-Market Value) after all unsecured depositors are paid out. It is not enough to repay all insured deposits.
The data in the graph above shows Bank Call Reports assets in Q1 2022. The banks in the upper right corner, alongside SVB (with $218 billion in assets), had the largest losses and had the most unsecured deposits as of 2018. vs. Mark-to-Market Value
Rising interest rates and the presence of more unsecured deposits in the US also affect banking stability in the US.
“Decreasing bank asset values have a significant impact on the US banking system on uninsured depositors.”
federal government The president also reassured Joe Biden that the shutdown of Silicon Valley and Signature Banks will not affect taxpayers.
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