U.S._ Economists warn that nearly 200 banks are at risk of runs, failure

THE WASHINGTON TIMES

Economists warn that nearly 200 banks are at risk of runs, failure

A sign is displayed at a branch of Signature Bank in New York, Monday, March 13, 2023. Lawmakers are up in arms over the collapse of Silicon Valley Bank and Signature Bank, and they’re questioning what went wrong. But while … more >


By Dave Boyer - The Washington Times - Sunday, March 19, 2023


Fears that another interest rate hike will hasten more bank failures will loom over the Federal Reserve’s meeting this week after a new study found that nearly 200 banks are at risk of the same sort of collapse as happened to Silicon Valley Bank.

The fear is that another rate hike from the Federal Reserve to tamp down inflation would sap the value of banks’ assets such as government bonds and mortgage-backed securities. That would make them vulnerable to a run by depositors — the same way SVB went bust.

“The recent declines in bank asset values very significantly increased the fragility of the U.S. banking system to uninsured depositor runs,” wrote economists at the Social Science Research Network. “Our calculations suggest these banks are certainly at a potential risk of a run, absent other government intervention or recapitalization.”

The network’s study estimated that 186 banks in the U.S. are vulnerable if just half of their depositors withdraw their funds.

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READ MORE: https://www.washingtontimes.com/news/2023/mar/19/economists-warn-nearly-200-banks-are-risk-runs-fai/

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