“Expert predicts potential insolvency for almost half of US banks”

Almost half of the 4,800 US banks are potentially insolvent, they have used up their reserves and operate with negative capital.

This was stated by banking expert at Stanford University Amit Seru, writes The Telegraph.

“Let’s not pretend that we are talking only about Silicon Valley Bank and First Republic. Most of the US banking system is potentially insolvent,” he said.

The US authorities can contain the immediate liquidity crunch by temporarily guaranteeing all deposits. But this does not solve a more serious solvency crisis.

Seru claims that the current policy of the US authorities is reminiscent of the events before the 2008 global crisis, when it was also stated that “everything will be fine.”

The publication writes that nearly half of America’s 4,800 banks are “already burning through their capital stocks.”

Recall that in the US at the beginning of the week, the third major bank went bankrupt in the last two months – First Republic. It is taken over by JPMorgan Chase Bank.

Earlier in the US, Silicon Valley and Signature banks collapsed.

One of the reasons for the bankruption is the increase in the Fed’s rate, which was once again raised just the other day to a maximum since 2007.