282 US Banks Face Potential Collapse Due to “Toxic Combo” of Risks: Report
A new report reveals that a total of 282 US banks with $900 billion in total assets are at risk of failure due to a dangerous combination of factors. These banks have significant exposure to commercial real estate and substantial unrealized losses on their balance sheets, according to consulting firm Klaros Group. While the names of the banks are not disclosed for fear of sparking bank runs, it is known that New York Community Bank (NYCB) is one of the high-profile institutions on the list.
The Dangerous Combination
Klaros Group’s report highlights the risks faced by these 282 US banks:
- Large exposure to commercial real estate
- Significant unrealized losses on their balance sheets
The Challenge for Regulators
Klaros co-founder Brian Graham emphasizes the magnitude of the challenge faced by regulators when dealing with such a large number of banks at risk:
“If there were just 10 banks that were in trouble, they would have all been taken down and dealt with. When you’ve got hundreds of banks facing these challenges, the regulators have to walk a bit of a tightrope.”
The Size and Profile of At-Risk Banks
Among the 282 banks, 16 hold between $10 billion and $100 billion in assets, while the majority have less than $10 billion in assets. The report does not disclose the names of these financial institutions, but it is noted that New York Community Bank (NYCB) is one notable name on the list.
New York Community Bank (NYCB)
New York Community Bank (NYCB) is one of the high-profile banks on the list of at-risk institutions. The bank recently revealed that its losses in the fourth quarter of last year were $2.4 billion worse than previously reported. Additionally, $4.165 billion in deposits have exited the bank in the last few months.
Hot Take: US Banks Facing a Precarious Situation
The potential collapse of 282 US banks due to a combination of risks presents a precarious situation for both the financial institutions and regulators. With a total of $900 billion in assets at stake, it is crucial to address these risks and prevent a systemic failure that could have severe implications for the banking sector and the broader economy.
While the names of the banks are kept confidential to avoid causing panic among depositors, it is clear that this issue requires immediate attention and action from regulators.
As investors and individuals with accounts at these banks, it is important to stay informed about any updates or developments regarding their financial health. By monitoring news sources and official statements, you can make informed decisions about your deposits and take appropriate actions to protect your assets.
Overall, this report serves as a reminder of the inherent risks in the banking sector and highlights the need for effective risk management practices, transparency, and regulatory oversight to ensure the stability and resilience of financial institutions.
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