186 US Banks Are Vulnerable

If you have been following Andrew Henderson (the Nomad Capitalist), he'll convince you that US banks are weaker than you think. In fact, he insists your money isn’t safe anymore. 

 

Notwithstanding, a research paper posted on the Social Science Research Network on March 24, 2023 titled “Monetary Tightening and US Bank Fragility in 2023: Mark-to-Market Losses and Uninsured Depositor Runs?” had concluded that 186 banks in the US are at risk of failure due to rising interest rates and a high proportion of uninsured deposits. 

 

The economists who conducted the study warned that these 186 banks are at risk without government intervention or recapitalization. The findings underscore the importance of careful risk management and diversification of funding sources for banks to ensure their stability in the face of market fluctuations. 

 

In the meantime, German Chancellor Olaf Scholz has promised that the country’s largest lender, Deutsche Bank, will not suffer the same fate as embattled Credit Suisse, after the bank’s shares fell by more than 14 percent on the Frankfurt Stock Exchange on Friday morning trading before clawing back ground in the afternoon to trade 9.5 percent lower, at 8.43 euros ($9.07) a share. 

 

Tumbling bank stocks dragged down markets across Europe on that same day with Germany’s Commerzbank down 7.5 percent, France’s Societe Generale off 5.9 percent and Austria’s Raiffaisen down 5.9 percent. 

 

Deutsche Bank are one of 30 banks considered globally significant financial institutions, so international rules require them to hold higher levels of capital reserves because their failure could cause widespread losses. 

 

Certainly, the banking sector is not out of the woods and US banks in particular are vulnerable.