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The failures of Silicon Valley Bank, Signature Bank and First Republic Bank are just the tip of the iceberg, and more than half of U.S. lenders are already underwater, says Professor Amit Seru, a banking expert at Stanford University. “Much of the US banking system is potentially insolvent,” he says.
A Hoover Institution report by Professor Seru and a group of banking experts calculates that more than 2,315 US banks are currently sitting on assets worth less than their liabilities. The market value of their loan portfolios is $2 trillion lower than the stated book value.
Almost half of America’s 4,800 banks have already burned through their capital buffers. They may not have to mark all losses to market under U.S. accounting rules but that does not make them solvent. Somebody will take those losses.
Read the following articles below for more information:
Half of US banks are already insolvent – this is how a credit crunch begins (CEO North America, 5-16-23)
They Warn That More Than 2,000 US Banks “Are Potentially Insolvent” (Hoover Institution, 5-6-23)