Cetoex News – A recent study by economists identified 186 banks at risk. These banks face issues similar to that which caused the collapse of Silicon Valley Bank. SIVB collapsed earlier this week due to the bank’s assets being diminished by increasing interest rates. This led to concerned customers withdrawing their uninsured deposits.

During the Federal Reserve’s swift rate-hike campaign, the economists evaluated individual U.S. banks. They assessed asset books and market value losses. Assets such as Treasury notes and mortgage loans can decrease in value. This happens when new bonds offer higher rates. The economists also analyzed the banks’ funding percentages. They focused on funding derived from uninsured depositors, those with accounts holding over $250,000.

Their findings suggest a potential problem. If half of these uninsured depositors were to withdraw funds rapidly from any of these 186 U.S. banks, even insured depositors might face impairments. This is due to insufficient assets available for all depositors. In such cases, intervention from the FDIC could become necessary.

It is crucial to note a significant limitation in this research. The study does not consider hedging strategies. These strategies may safeguard numerous banks against rising interest rates.

In their paper, the economists stated: “Our calculations suggest these banks are certainly at a potential risk of a run, absent other government intervention or recapitalization.”

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Cetoex News – Signature Bank was the third victim of the back-to-back bank collapses recently. The year 2023 has been ablaze with headlines about the unexpected shutdowns of some of the banking industry’s titans. The likes of Silvergate Bank, Silicon Valley Bank, and Signature Bank have all bitten the dust. These three financial giants share a common characteristic: they are all known for their support of cryptocurrency businesses.

Barney Frank, a board member of the Signature Bank, earlier stated that the action was a very strong “anti-crypto message” by the authorities. Now, according to the latest news shared by two anonymous sources with Reuters, the Federal Deposit Insurance Corporation (FDIC) has asked the buyers of Signature Bank to stop doing business with cryptocurrency firms.

Is Signature Bank and other shutdowns part of an anti-crypto plan?

The reports, if proven true, will confirm the fact that the regulators brought down the bank as a part of their anti-crypto message. Frank’s earlier statement was dismissed by the New York Department of Financial Services.

According to the Reuters report, bidders or potential buyers were asked to cut their ties with cryptocurrency businesses. The regulators’ scrutiny tightened after the collapse of FTX and reached its peak in February. However, amidst all the turmoil, cryptocurrencies exhibited a positive run.

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Cetoex News – Following the highly-publicized collapse of Silicon Valley Bank, US regulators have closed Signature Bank. Specifically, the New York-based bank has been closed citing “systemic risk,” according to a joint statement released today by the Federal Reserve, Treasury, and FDIC.

The statement assured that SVB depositors will have access to their money on Monday. Additionally, it noted the closure of the New York-based bank in a surprise development. Conversely, Signature Bank depositors will have full access to deposits according to CNBC.

Regulators Close Signature Bank

The sudden and unexpected collapse of SVB Financial has shaken the financial sector. Yet, as the industry braces for what’s to come from the largest bank failure since 2008, the US regulators have already announced the closure of yet another bank.

Specifically, the Federal Reserve has announced that US regulators have closed Signature Bank. Subsequently, stating citing a potential “systemic risk,” within the statement conceived by the Federal Reserve, Treasury, and FDIC

“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority.” the statement read. “All depositors of this institution will be made whole. As with the resulting of Silicon Valley Bank, no losses will be borne by the taxpayer,” it added.

Signature remains a prominent bank in the crypto industry, holding $110.4 billion in total assets, and $88.6 billion in total deposits, according to CNBC. Conversely, previous reports of unrealized losses for US banks could have played a part in Signature Banks’ eventual closure.

NEWS BY – CETOEX NEWS