SVB Analysis Shows More Than 186 US Banks Still Fragile

SVB Analysis Shows More Than 186 US Banks Might Still Collapse

based on,

Monetary Tightening and U.S. Bank Fragility in 2023: Mark-to-Market Losses and Uninsured Depositor Runs?

A case study of the recently failed Silicon Valley Bank (SVB) is illustrative. 10 percent of banks have larger unrecognized losses than those at SVB. Nor was SVB the worst capitalized bank, with 10 percent of banks having lower capitalization than SVB. On the other hand, SVB had a disproportional share of uninsured funding: only 1 percent of banks had higher uninsured leverage. Combined, losses and uninsured leverage provide incentives for an SVB uninsured depositor run.

So, the Fed has created the instability - so much for prudent monetary policy.

That still doesn't explain why so many banks have held on to long-dated bonds as prices fell. The Fed did telegraph its intentions. It may be a ruinous policy, but it was a stated policy - they were not lying about that.

Too late now, though, hence the Fed has also stepped in as the lender of last resort... which totally undoes the rate hike! Gigantic levels of either stupidity or malice - and I must assume the latter - so that the US gets both high price inflation and high interest rates, due to further monetary inflation.