A recent study indicates that 200 US banks are now threatened by financial turmoil that has not been exposed. This speculation has been prompted by a banking crisis foisting a dangerous signal for the US economy.
Financial Turmoil Spreads in the US Economy
Sources say that monetary concerns and a precarious situation with US banks in 2023 are alarming due to 186 banks having a negative insured deposit coverage ratio. Researchers say these banks could be the subject of a bank run without the government's help, reported Almayadeen.
These institutions with problems with their banking sheets were exposed to $300 billion of insured deposits, as published a week ago. The study states that losses from the deposit insurance fund are expected to be $10 billion. Should the FDIC shut down these banks, if a run occurs, they would have no money to give to depositors who are not insured. This will be the expected decision by the deposit if it comes to that.
Last Friday, the 16th largest bank in the USA had its shares crash very fast by 60%, and it became the second biggest bank crash in US banking history, cited ABC news. The most recent one is the 2008 market collapse that forced regulators to seize all assets and stop trading on its stocks.
Republican Congressman Gosar scoured Joe Biden, criticizing the economic policies which caused the crash of the Silicon Valley Bank (SVB) attributable to him, and mentioned the bank run is inevitable.
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Gosar added the SVB had put a large number of deposits into mortgage-backed securities and treasury bonds that came to disaster under Biden's leadership. In contrast to the administration of Donald Trump, which benefited from low rates. But "when Bidenflation started to run out of control, it forced the Fed to raise interest rates," he asserts.
Gold Price Almost $2000 Mark, Affected by US Bank Collapse
Last Friday, US banks crashed an event of significance as the cost of gold per ounce hit US$1,988.18, a 3.6% increase, Investing News reported.
Many investors seeing the crash of Silicon Valley Bank and Signature Bank, sought more security with gold in the week. Reaching the US $2,000 mark was seen as an acceptable result of the bank collapse. The Silicon Valley Bank problem became the driver of gold climbing in price over the end of last week until the bank's downfall on March 12.
The middle of 2020 was the first time that gold went up to that price per ounce due to the pandemic's effect on the global economy. In March of 2022, it breached the USD 2000 mark. It had had tie-ups with startups, venture capitalists, and tech firms as its clients with its crash took the tech sector down. Lending and broader markers gave these sectors security, but the crash impedes them now.
One of the reasons why the bank was shuttered on March 10 was because cash became scarce. Later, the US government took control of it to allow depositors access to their funds. The financial turmoil that risks 200 US banks is alarming as the Bidenflation even brought gold to new highs as well.
