Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Study finds 186 banks vulnerable to SVB-like collapse

Study finds 186 banks vulnerable to SVB-like collapse

The study created a scenario where half of 186 banks' depositors withdrew their funds

A new study says that, depending on certain market conditions, nearly 200 U.S. banks could be vulnerable to the same fate as Silicon Valley Bank (SVB).

A recent Social Science Research Network study suggests that 186 American banks could fail if half of their depositors suddenly withdrew their funds. The researchers formulated a speculative scenario in which each bank experienced a run, and concluded that the FDIC would run out of money.

The study was published shortly after the collapse of SVB, the worst American financial institution failure since 2008.

"Our calculations suggest these banks are certainly at a potential risk of a run, absent other government intervention or recapitalization," the economists wrote.

"Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk," the study's abstract reads. "If uninsured deposit withdrawals cause even small fire sales, substantially more banks are at risk."

The issue lies in the fact that the studied banks' assets are in government bonds and mortgage backed securities, which were negatively affected by the Federal Reserve's recent interest rate hikes.

SANTA CLARA, CALIFORNIA - MARCH 10: A worker (C) tells people that the Silicon Valley Bank (SVB) headquarters is closed on March 10, 2023 in Santa Clara.


Many of SVB's assets were long-term government bonds. Despite being a sound long-term investment, they were not worth as much as when SVB originally bought them. SVB invested too heavily in longer-term mortgage securities with more than 10 years to maturity.

SVB sold those bonds at a staggering $1.8 billion loss to meet customer withdrawals. When SVB disclosed that loss, depositors panicked and withdrew their money.

People line up outside of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara.


"Overall, these calculations suggest that recent declines in bank asset values very significantly increased the fragility of the US banking system to uninsured depositor runs." the study's abstract concludes.

FOX Business has reached out to FDIC for comment, but has not received a statement.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
EU Seeks ‘Farage Clause’ in Brexit Reset Talks With Britain
Germany Hit by Major Airport Strikes Disrupting European Travel
Russia Deploys Hypersonic Missile in Strike on Ukraine
There is no sovereign immunity for poisoning millions with drugs.
Béla Tarr, Visionary Hungarian Filmmaker, Dies at Seventy After Long Illness
German Intelligence Secretly Intercepted Obama’s Air Force One Communications
The U.S. State Department’s account in Persian: “President Trump is a man of action. If you didn’t know it until now, now you do—do not play games with President Trump.”
President Trump Says United States Will Administer Venezuela Until a Secure Leadership Transition
Delta Force Identified as Unit Behind U.S. Operation That Captured Venezuela’s President
Europe’s Luxury Sanctions Punish Russian Consumers While a Sanctions-Circumvention Industry Thrives
Europe’s Largest Defence Groups Set to Return Nearly Five Billion Dollars to Shareholders in Twenty Twenty-Five
Diamonds Are Powering a New Quantum Revolution
The Battle Over the Internet Explodes: The United States Bars European Officials and Ignites a Diplomatic Crisis
Fine Wine Investors Find Little Cheer in Third Year of Falls
Caviar and Foie Gras? China Is Becoming a Luxury Food Powerhouse
Hackers Are Hiding Malware in Open-Source Tools and IDE Extensions
Traveling to USA? Homeland Security moving toward requiring foreign travelers to share social media history
Trump in Direct Assault: European Leaders Are Weak, Immigration a Disaster. Russia Is Strong and Big — and Will Win
EU Firms Struggle with 3,000-Hour Paperwork Load — While Automakers Fear De Facto 2030 Petrol Car Ban
White House launches ‘Hall of Shame’ site to publicly condemn media outlets for alleged bias
European States Approve First-ever Military-Grade Surveillance Network via ESA
The Ukrainian Sumo Wrestler Who Escaped the War — and Is Captivating Japan
MediaWorld Sold iPad Air for €15 — Then Asked Customers to Return Them or Pay More
Car Parts Leader Warns Europe Faces Heavy Job Losses in ‘Darwinian’ Auto Shake-Out
Families Accuse OpenAI of Enabling ‘AI-Driven Delusions’ After Multiple Suicides
U.S. Envoys Deliver Ultimatum to Ukraine: Sign Peace Deal by Thursday or Risk Losing American Support
The U.S. State Department Announces That Mass Migration Constitutes an Existential Threat to Western Civilization and Undermines the Stability of Key American Allies
A Decade of Innovation Stagnation at Apple: The Cook Era Critique
German Entertainment Icons Alice and Ellen Kessler Die Together at Age 89
AI Researchers Claim Human-Level General Intelligence Is Already Here
Tragedy in Serbia: Coach Mladen Žižović Collapses During Match and Dies at 44
Trump–Putin Budapest Summit Cancelled After Moscow Memo Raises Conditions for Ukraine Talks
Elon Musk Unveils Grokipedia: An AI-Driven Alternative to Wikipedia
Russia’s President Putin Declares Burevestnik Nuclear Cruise Missile Ready for Deployment
US Administration Under President Donald Trump Reportedly Lifts Ban on Ukraine’s Use of Storm Shadow Missiles Against Russia
White House Announces No Imminent Summit Between Trump and Putin
China Presses Netherlands to “properly” Resolve the Nexperia Seizure as Supply Chain Risks Grow
Merz Attacks Migrants, Sparks Uproar, and Refuses to Apologize: “Ask Your Daughters”
Apple Challenges EU Digital Markets Act Crackdown in Landmark Court Battle
Shouting Match at the White House: 'Trump Cursed, Threw Maps, and Told Zelensky – "Putin Will Destroy You"'
‘No Kings’ Protests Inflate Numbers — But History Shows Nations Collapse Without Strong Executive Power
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Dutch Government Seizes Chipmaker After U.S. Presses for Removal of Chinese CEO
AI and Cybersecurity at Forefront as GITEX Global 2025 Kicks Off in Dubai
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
×