Telegraph: Over 2,000 U.S. Banks are Insolvent

Published by | May 6, 2023

The U.S. banking sector has recently been hit by a major crisis

Almost half of the 4,800 banks in the U.S. are nearly insolvent, as they have burned through their capital buffers, The Telegraph reported earlier this week, citing a group of banking experts.

According to Professor Amit Seru, a banking expert at Stanford University, around half of U.S. lenders are underwater.

“Let’s not pretend that this is just about Silicon Valley Bank and First Republic,” he said. “A lot of the U.S. banking system is potentially insolvent.”

Last week, First Republic was seized by U.S. financial regulators and acquired by JPMorgan, the country’s biggest bank. The San Francisco-based lender had previously received a $30-billion rescue shot from a group of Wall Street banks in the form of deposits. The sale of First Republic Bank followed massive deposit runs in March, which caused two regional lenders, Silicon Valley Bank and Signature Bank, to fail within days.

Around 2,315 banks across the U.S. are currently sitting on assets worth less than their liabilities, according to a Hoover Institution report by Professor Seru and a group of banking experts, as cited by the media.

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