$517,000,000,000 in Unrealized Losses Hit US Banking System, FDIC Says 63 Lenders on Brink of Insolvency!!
Unrealized losses in the US banking system are once again on the rise, according to new numbers from the Federal Deposit Insurance Corporation (FDIC).
In its Quarterly Banking Profile report, the FDIC says banks are now saddled with more than half a trillion dollars in paper losses on their balance sheets, due largely to exposure to the residential real estate market.
Unrealized losses represent the difference between the price banks paid for securities and the current market value of those assets.
Although banks can hold securities until they mature without marking them to market on their balance sheets, unrealized losses can become an extreme liability when banks need liquidity.
“Unrealized losses on available-for-sale and held-to-maturity securities increased by $39 billion to $517 billion in the first quarter. Higher unrealized losses on residential mortgage-backed securities, resulting from higher mortgage rates in the first quarter, drove the overall increase. This is the ninth straight quarter of unusually high unrealized losses since the Federal Reserve began to raise interest rates in first quarter 2022.”
The FDIC also says that the number of lenders on its Problem Bank List rose last quarter. According to the agency, these banks are on the brink of insolvency due to financial, operational, or managerial weakness or a combination of such issues.
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