FDIC Reveals 63 US Banks at Risk of Insolvency, $517B in Unrealized Losses

Sixty-three US banks reported $517 billion in unrealized losses during the first quarter of 2024.

The Federal Deposit Insurance Corporation (FDIC) disclosed that these unrealized losses increased by $39 billion since the previous quarter, raising concerns about the stability of the US economy and financial sector.

The ISM Manufacturing PMI came in below expectations at 48.7, indicating a sharper-than-expected decline in manufacturing activity. In response to the weak industrial data, the price of Bitcoin surged past $70,000 yesterday, as expectations of an interest rate cut by the US Federal Reserve grow.

US banks and businesses continue to face significant pressure due to rising interest rates and delayed rate cuts. Prior to the Federal Reserve Board's termination of the Bank Term Funding Program (BFTP) on March 11th, banks, especially regional banks, were already facing challenges.

According to the FDIC, approximately 63 US banks hold $517 billion in unrealized losses in Q1 2024, placing the US banking sector at significant risk of insolvency.

For nine consecutive quarters, unrealized losses have remained unusually high, dating back to the US Federal Reserve's initial interest rate hikes in 2022.

The potential for bank runs and the cryptocurrency market, particularly Bitcoin, are anticipated to experience significant upward momentum. However, given that it is an election year, the Federal Reserve and the Treasury Department are likely to have preparedness measures in place.

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