200 More Banks Under Threat By Charles Taylor (Florida)

The Feds have said that it will only bail out certain banks, those that it favours as important, whatever that means. That issue is dealt with in a separate article today at the blog. For the moment though, it is noted that there are another 200 banks that have the same risk that the collapsed Silicon Valley Bank has, regarding the value of assets. It would not take too many withdrawals to collapse these banks as well. A large amount of their assets are held in interest-rate sensitive financial instruments, such as government bonds and mortgage backed securities, and the value of these has crashed due to the Federal Reserve’s rise in interest rates. One study found a $ 2 trillion los in market value. This could turn out very badly, at a time of compounding crisis. Investors are easily spooked, and with electronic baking, no longer need to stand in line to get heir money out. The fall of these banks could happen just as quickly as SVB went down. This is no doubt part of the world Economic Forum-inspired plan for Central Bank digital currencies, certain to morph into a One World Bank digital currency, that will control the world, and every breath, and thought one makes. And, it is happening extremely fast. Unfortunately, rallying grassroots resistance is much slower, but we press on regardless.

https://nypost.com/2023/03/18/nearly-200-banks-could-fail-the-same-way-svb-did-study/

“Nearly 200 more banks may be vulnerable to the same type of risk that took down Silicon Valley Bank: The value of the assets they hold. 

There are 186 banks across the country that could fail if half of their depositors quickly withdraw their funds, a new study published on the Social Science Research Network found. Even insured depositors — those with $250,000 or less in the bank — could have problems getting their cash if these institutions face the sort of run that Silicon Valley saw a week ago.

The concern is that these banks hold a significant amount of their assets in interest-rate sensitive financial instruments like government bonds and mortgage backed securities. The value of those older, low-interest investments dropped sharply as the Federal Reserve hiked interest rates over the past year.

In the case of SVB, the Santa Clara, California-based institution parked much of its cash in long-term government bonds, which are ultra-safe in terms of losing the initial investment, but were not worth as much as when SVB bought them, because interest rates have since gone higher. The bank had to sell off some of those bonds to meet customer demands for withdrawals at less than it paid for them, resulting in a nearly $2 billion loss.

When SVB disclosed that loss, along with a plan to raise an additional $500,000 million from Wall Street, it sparked fears among its venture capital and tech start-up-heavy customer base that the bank was insolvent. In a social media-fueled panic, customers rushed to withdraw their money out of concern that the bank would run out of case — a classic bank run. 

The federal government stepped in to promise it would back all depositors, not only those with the FDIC-limit $250,000, in an effort to stop a wider panic where depositors started pulling money from other banks that are roughly the same size.

Now, the study shows that a slew of those other banks could be vulnerable to the same developments if a high percentage of worried customers start trying to withdraw their deposits.

“Our calculations suggest these banks are certainly at a potential risk of a run, absent other government intervention or recapitalization,” the economists wrote.

The study looked at banks’ asset books nationwide, and found an estimated $2 trillion loss in their market value.”