U.S. banks on brink of collapse? $517 billion losses threaten 63 banks

[edjr 6,580]

https://finbold.com/u-s-banks-on-brink-of-collapse-517-billion-losses-threaten-63-banks/

Quote

 

The health of the U.S. banking system is a topic of constant scrutiny. Recent data from the Federal Deposit Insurance Corporation (FDIC) paints a mixed picture.

Banks reported a significant profit jump for the first quarter of 2024. According to the FDIC, the combined net income for 4,568 insured banks reached $64.2 billion, a surge of $28.4 billion or 79.5% compared to the previous quarter. 

Banks’ unrealized losses have increased significantly, reaching $517 billion. These losses stem primarily from their holdings in residential mortgage-backed securities. 

When interest rates rise, the value of these securities falls. While these losses are realized once the securities are sold, they can become a significant burden if banks need to raise cash quickly. 

This marks the ninth consecutive quarter of high unrealized losses, coinciding with the Federal Reserve’s interest rate hikes that began in early 2022.

The FDIC also reported a rise in the number of banks on its Problem Bank List. These banks are at risk of insolvency due to various financial weaknesses. However, the FDIC emphasizes that the number of problem banks remains within the historical range observed during non-crisis periods.

Federal agency assures that the US banking system isn’t in immediate danger. However, it acknowledges ongoing challenges posed by inflation, volatile stock markets, and geopolitical tensions. These factors could impact banks’ ability to lend, generate profits, and maintain sufficient liquidity. 

Additionally, specific loan portfolios, such as those for office properties and credit cards, require close monitoring due to potential deterioration. The FDIC will continue to supervise these issues along with funding pressures and shrinking profit margins.

 

The economy is fine - stupids. 

[thegeneral 3,131]

Got to make sure banks can generate profits! 

These dudes always get the bailouts if it comes to that. It’s one of the few things that is non-partisan in DC.

[RLLD 4,205]

2 minutes ago, thegeneral said:

Got to make sure banks can generate profits! 

These dudes always get the bailouts if it comes to that. It’s one of the few things that is non-partisan in DC.

Later, as more and more people are unable to sustain an existence in this economy they will stop paying more and more of their obligations to the banks; this was the death stroke in 2005-2008 as well.

As the banks begin to fail, cost of borrowing will continue to rise.....and available credit will shrink....and more people will start to stop paying....then, the government will bail out those banks. 

Inflation.....is a nefarious evil....

[Tree of Knowledge 1,817]

5 minutes ago, thegeneral said:

Got to make sure banks can generate profits! 

These dudes always get the bailouts if it comes to that. It’s one of the few things that is non-partisan in DC.

Those summer home mansions in the Hamptons aren’t going to suffer.  

[edjr 6,580]

9 minutes ago, RLLD said:

Later, as more and more people are unable to sustain an existence in this economy they will stop paying more and more of their obligations to the banks; this was the death stroke in 2005-2008 as well.

As the banks begin to fail, cost of borrowing will continue to rise.....and available credit will shrink....and more people will start to stop paying....then, the government will bail out those banks. 

Inflation.....is a nefarious evil....

I just checked.  I have $279,500 available credit - $6,981 used (all 0 APR or paid off monthly)   I need to go SHOPPING!

 

[Alias Detective 1,395]

3 minutes ago, edjr said:

I just checked.  I have $279,500 available credit - $6,981 used (all 0 APR or paid off monthly)   I need to go SHOPPING!

 

Available credit on what?  Do you mean equity or do you really have open cc's that can be maxed out at $279,500?

[edjr 6,580]

Just now, Alias Detective said:

Available credit on what?

Credit cards  

[Alias Detective 1,395]

Just now, edjr said:

Credit cards  

WTF for?  Macy's and Dicks don't even have that much in inventory.

[edjr 6,580]

3 minutes ago, Alias Detective said:

WTF for?  Macy's and Dicks don't even have that much in inventory.

My Amex is 75k my,  I have others at 50k.  I am addicted to credit. I have it all locked but every 6 months or so I will unlock and request higher limits and lock the back up

[Ron 'Tator Salad' White 120]

49 minutes ago, Tree of Knowledge said:

Those summer home mansions in the Hamptons aren’t going to suffer.  

Especially Bernie’s 

[TheNewGirl 1,474]

59 minutes ago, RLLD said:

Later, as more and more people are unable to sustain an existence in this economy they will stop paying more and more of their obligations to the banks; this was the death stroke in 2005-2008 as well.

As the banks begin to fail, cost of borrowing will continue to rise.....and available credit will shrink....and more people will start to stop paying....then, the government will bail out those banks. 

Inflation.....is a nefarious evil....

Yup. 

What do folks think happens when people can't pay credit debt or mortgages? 

Banks make their money off of the interest on this stuff. If people aren't paying....welp....people will almost always choose to feed their families over paying a credit card, car loan, or mortgage. And when food is still expensive and people can't find decent jobs...

But the economy is fine. 

[thegeneral 3,131]

1 hour ago, RLLD said:

Later, as more and more people are unable to sustain an existence in this economy they will stop paying more and more of their obligations to the banks; this was the death stroke in 2005-2008 as well.

As the banks begin to fail, cost of borrowing will continue to rise.....and available credit will shrink....and more people will start to stop paying....then, the government will bail out those banks. 

Inflation.....is a nefarious evil....

As long as the banks get to keep making profit on their bets then it’s all good.

If they don’t the world economy will come crashing down. 

[purdygood 343]

2 minutes ago, TheNewGirl said:

Yup. 

What do folks think happens when people can't pay credit debt or mortgages? 

Banks make their money off of the interest on this stuff. If people aren't paying....welp....people will almost always choose to feed their families over paying a credit card, car loan, or mortgage. And when food is still expensive and people can't find decent jobs...

But the economy is fine. 

maybe these banks shouldn't be extending credit to or giving loans to people who cant pay them back (shrugs)

[The Real timschochet 6,684]

5 minutes ago, TheNewGirl said:

Yup. 

What do folks think happens when people can't pay credit debt or mortgages? 

Banks make their money off of the interest on this stuff. If people aren't paying....welp....people will almost always choose to feed their families over paying a credit card, car loan, or mortgage. And when food is still expensive and people can't find decent jobs...

But the economy is fine. 

Not saying that this won’t happen or that there couldn’t be a sudden collapse but…my entire life people have been making this same prediction. Eventually the debt will get too large, people are borrowing too much, and the chickens will come home to roost. 

Meanwhile, in my business (commercial real estate) I get calls nearly every day from prospective investors: do I have property for sale? Do I know property for sale? Do I know any good deals? Etc. Lots of people with lots of money wanting to find a place to put it. And here in California, despite the rules, despite the regulations, despite all the problems there is continual building and building and plans for new building. 

[thegeneral 3,131]

8 minutes ago, purdygood said:

maybe these banks shouldn't be extending credit to or giving loans to people who cant pay them back (shrugs)

Put the bankers in charge of this and slowly remove regulations. What could go wrong!

[TheNewGirl 1,474]

8 minutes ago, The Real timschochet said:

Not saying that this won’t happen or that there couldn’t be a sudden collapse but…my entire life people have been making this same prediction. Eventually the debt will get too large, people are borrowing too much, and the chickens will come home to roost. 

Meanwhile, in my business (commercial real estate) I get calls nearly every day from prospective investors: do I have property for sale? Do I know property for sale? Do I know any good deals? Etc. Lots of people with lots of money wanting to find a place to put it. And here in California, despite the rules, despite the regulations, despite all the problems there is continual building and building and plans for new building. 

Not where I am. 

I have family that's had property for sale for years, and it's still out there for sale. And I do mean YEARS. Maybe it's just too $$ or not the right location. It is more rural, but you'd think a lot of folks would want to move to more rural places. 

 

Anyways, a while ago, I had an acquaintance who had some issues with her Big Bank, too many fees, she was overdrawn and they charged her, etc. So, she posted on social media that she wished that this bank would "fail." This is the THIRD largest bank in the US. I asked her if she realized what it would mean if that bank actually DID fail and what she was asking for. 

Of course, she just thought it would mean that they'd "no longer do business and couldn't screw their customers." 

Unfortunately, this is what most people think when they talk about the Big Banks going under, they don't realize what it means. But I digress. 

I work in banking, I could have told you that the writing is on the wall months ago. My husband works in the car industry (no he's not a sales man), and he could tell you the same thing among banks/lenders, manufactures, dealerships, and auctions. People can't afford things. 

[TheNewGirl 1,474]

15 minutes ago, purdygood said:

maybe these banks shouldn't be extending credit to or giving loans to people who cant pay them back (shrugs)

Perhaps at the time they got their loans and credit they could, but with the slow increase in prices and loss of jobs, now they can't. 

Banks don't lend like they used to in terms of 100% mortgages, or ARMs and things like that. They are still out there, but not like they were in the early 00s. There are more rules and regulations now to try and prevent what happened before 

[Hardcore troubadour 15,291]

Trump? 

[BeachGuy23 642]

25 minutes ago, TheNewGirl said:

Not where I am. 

I have family that's had property for sale for years, and it's still out there for sale. And I do mean YEARS. Maybe it's just too $$ or not the right location. It is more rural, but you'd think a lot of folks would want to move to more rural places. 

 

Anyways, a while ago, I had an acquaintance who had some issues with her Big Bank, too many fees, she was overdrawn and they charged her, etc. So, she posted on social media that she wished that this bank would "fail." This is the THIRD largest bank in the US. I asked her if she realized what it would mean if that bank actually DID fail and what she was asking for. 

Of course, she just thought it would mean that they'd "no longer do business and couldn't screw their customers." 

Unfortunately, this is what most people think when they talk about the Big Banks going under, they don't realize what it means. But I digress. 

I work in banking, I could have told you that the writing is on the wall months ago. My husband works in the car industry (no he's not a sales man), and he could tell you the same thing among banks/lenders, manufactures, dealerships, and auctions. People can't afford things. 

And yet consumers keep spending like drunken sailors.

Of course, prior to Biden, no one abused credit, everyone paid their bills, and no banks went under.

LMFAO at Chicken Little Cultist Karen.

How goes the bank teller gig?

[thegeneral 3,131]

24 minutes ago, Hardcore troubadour said:

Trump? 

He wouldn’t have any impact on this. He would just claim he fixed it like you have never seen!

[TheNewGirl 1,474]

7 minutes ago, BeachGuy23 said:

And yet consumers keep spending like drunken sailors.

Of course, prior to Biden, no one abused credit, everyone paid their bills, and no banks went under.

LMFAO at Chicken Little Cultist Karen.

How goes the bank teller gig?

You must feel really threatened by intelligent females. 

I feel pity for you. 

[The Real timschochet 6,684]

34 minutes ago, TheNewGirl said:

Not where I am. 

I have family that's had property for sale for years, and it's still out there for sale. And I do mean YEARS. Maybe it's just too $$ or not the right location. It is more rural, but you'd think a lot of folks would want to move to more rural places. 

 

Anyways, a while ago, I had an acquaintance who had some issues with her Big Bank, too many fees, she was overdrawn and they charged her, etc. So, she posted on social media that she wished that this bank would "fail." This is the THIRD largest bank in the US. I asked her if she realized what it would mean if that bank actually DID fail and what she was asking for. 

Of course, she just thought it would mean that they'd "no longer do business and couldn't screw their customers." 

Unfortunately, this is what most people think when they talk about the Big Banks going under, they don't realize what it means. But I digress. 

I work in banking, I could have told you that the writing is on the wall months ago. My husband works in the car industry (no he's not a sales man), and he could tell you the same thing among banks/lenders, manufactures, dealerships, and auctions. People can't afford things. 

Not sure what to tell you. I have good friends in banking as well who are very bullish. I guess it depends on who you talk to. I try to be an optimist but I will never argue with what you’re experiencing around you. 

[BeachGuy23 642]

6 minutes ago, TheNewGirl said:

You must feel really threatened by intelligent females. 

I feel pity for you. 

I'm not a cultist, therefore I'm a yuuggeee fan of intelligent ladies.

Now if you could point one out I'll give them some love girlio.

[thegeneral 3,131]

It’s always good to be “rich” but is really good right now.

[nobody 2,656]

2 hours ago, RLLD said:

Later, as more and more people are unable to sustain an existence in this economy they will stop paying more and more of their obligations to the banks; this was the death stroke in 2005-2008 as well.

As the banks begin to fail, cost of borrowing will continue to rise.....and available credit will shrink....and more people will start to stop paying....then, the government will bail out those banks. 

Inflation.....is a nefarious evil....

This seems a bit counter intuitive to me.

Are you suggesting that people are paying down credit with credit when you say, "rise.....and available credit will shrink....and more people will start to stop paying"

If so, inflation is our friend.  It will make costs to borrow to high, but wages will have to rise as well.  Those two things will make it less likely for people to live on credit, and it will artificially shrink their existing debt by devaluing the dollar.

[nobody 2,656]

In my view inflation is good if you have debt like a mortgage.  It's going to keep the buyer above water and act as a hedge, but the debt holder essentially used that money ahead of time while the dollars were worth more.  

Inflation is bad if you have a lot of cash since it erodes your buying power

[TimHauck 2,757]

I can’t believe mortgage backed securities still exist after 2008

[RLLD 4,205]

7 minutes ago, nobody said:

This seems a bit counter intuitive to me.

Are you suggesting that people are paying down credit with credit when you say, "rise.....and available credit will shrink....and more people will start to stop paying"

If so, inflation is our friend.  It will make costs to borrow to high, but wages will have to rise as well.  Those two things will make it less likely for people to live on credit, and it will artificially shrink their existing debt by devaluing the dollar.

As more defaults transpire, which is to say as more people reach the limits of credit availability and inflation forces more people to focus on survival they will just stop paying the debt.  As this transpires, the banks will respond to the losses by making credit more difficult to acquire and the interest on loans will increase and the ability of the banks to lend will be more limited....

Now, this hits the poor and lower middle class with intensity. For the rest of us we handle it a little better. But not entirely, as people discovered in 2008.

The immediate need is to let the Fed do their job and do nothing to contribute to inflation, but we already know the current administration does not give a fock.

[nobody 2,656]

5 minutes ago, RLLD said:

As more defaults transpire, which is to say as more people reach the limits of credit availability and inflation forces more people to focus on survival they will just stop paying the debt.  As this transpires, the banks will respond to the losses by making credit more difficult to acquire and the interest on loans will increase and the ability of the banks to lend will be more limited....

Now, this hits the poor and lower middle class with intensity. For the rest of us we handle it a little better. But not entirely, as people discovered in 2008.

The immediate need is to let the Fed do their job and do nothing to contribute to inflation, but we already know the current administration does not give a fock.

That all makes sense, but it will trigger deflation, no?

People stop paying debt.  Credit seizes up.  Demand for everything falls.  Prices fall.  Homes gets underwater.  Return to step 1.

Inflation is a not a nefarious evil.  It's a necessary evil.  Otherwise we'd hit a deflationary feedback loop anytime we had a recession.  And this isn't theory.  It happened during the great depression.

[nobody 2,656]

34 minutes ago, thegeneral said:

He wouldn’t have any impact on this. He would just claim he fixed it like you have never seen!

I know you hate him, but he absolutely would fix it.  

[GutterBoy 2,899]

3 minutes ago, nobody said:

That all makes sense, but it will trigger deflation, no?

People stop paying debt.  Credit seizes up.  Demand for everything falls.  Process fall.  Home gets underwater.  Return to step 1.

Inflation is a not a nefarious evil.  It's a necessary evil.  Otherwise we'd hit a deflationary feedback loop anytime we had a recession.  And this isn't theory.  It happened during the great depression.

It happened in 2008 which is why the fed bought everything up pumping trillions into the system to prevent another great depression.

[edjr 6,580]

1 hour ago, purdygood said:

maybe these banks shouldn't be extending credit to or giving loans to people who cant pay them back (shrugs)

you'd think they learned their lesson, but Barrack Hussain Obama to the rescue. 

[GutterBoy 2,899]

Just now, nobody said:

I know you hate him, but he absolutely would fix it.  

What would he do?  He doesn't understand any of this, and his people are just as dumb, the ones that aren't already in jail.

[edjr 6,580]

13 minutes ago, TimHauck said:

I can’t believe mortgage backed securities still exist after 2008

Banks need to fleece people, it is how they make money

[GutterBoy 2,899]

2 hours ago, Tree of Knowledge said:

Those summer home mansions in the Hamptons aren’t going to suffer.  

They did in 2008

 

[thegeneral 3,131]

2 minutes ago, nobody said:

I know you hate him, but he absolutely would fix it.  

His move would be peel away all regulations. Then be all shocked when some cocksmokes ruin it with their greed and stick their hands out (in the case of 2008 with a gun to our heads).

 

[Mike Honcho 5,251]

Is this happening cause they capped late fees? 

[RLLD 4,205]

12 minutes ago, nobody said:

That all makes sense, but it will trigger deflation, no?

People stop paying debt.  Credit seizes up.  Demand for everything falls.  Prices fall.  Homes gets underwater.  Return to step 1.

Inflation is a not a nefarious evil.  It's a necessary evil.  Otherwise we'd hit a deflationary feedback loop anytime we had a recession.  And this isn't theory.  It happened during the great depression.

Excessive inflation is a nefarious evil.....  

[edjr 6,580]

4 minutes ago, Mike Honcho said:

Is this happening cause they capped late fees? 

A judge put the bo nix on that

[thegeneral 3,131]

18 minutes ago, edjr said:

you'd think they learned their lesson, but Barrack Hussain Obama to the rescue. 

Everyone was on board with the bailouts. If it didn’t happen we’d have been focked.

The banks are the ones who should be the grownups not your average idiot out there.