US banks now hold 7x more unrealized losses than during the 2008 financial crisis, according to fresh data from the FDIC.
The FDIC reported that unrealized losses on securities totaled a whopping $516.5 billion, which was an increase of $38.9 billion from the previous quarter.
This increase was largely due to higher losses on residential mortgage-backed securities, which were affected by rising mortgage rates, per the report.
FDIC-insured institutions reported a net loss of $32.1 billion in the fourth quarter of 2008 ($12.1 billion during the 1st) — demonstrating just how overleveraged institutions have gotten today.
The banking industry also reported total assets of $24.0 trillion in the first quarter 2024, an increase of $291.2 billion (1.2 percent) from fourth quarter 2023.
The quarterly increase was mainly due to higher balances in trading accounts (up $176.1 billion, or 23.2 percent), cash and balances due from depository institutions (up $79.0 billion, or 2.8 percent), and securities (up $39.9 billion, or 0.7 percent).
Alarmingly, the number of banks on the FDIC’s “Problem Bank List” increased from 52 to 63.
Total assets held by problem banks also rose $15.8 billion to $82.1 billion.
Problem banks represent 1.4 percent of total banks, which is within the normal range for non-crisis periods of 1 to 2 percent of all banks, per the FDIC.
However, the growing number of problem banks and unrealized losses points towards a shaky financial system.
In 2008, the economic consequences forced people to foreclose their homes, jobs were lost, and retirement savings were completely wiped out.
The social implications the collapse created put families on the street and triggered severe community strain.
The crisis affected economies worldwide, leading to global slowdowns and increased economic inequality in many regions.
Industry experts such as Robert Kiyosaki and Grant Cardone have warned that the people are going to experience a system crash unlike anything ever seen before.
But I’m curious to know what you think — leave your thoughts below.
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