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US Banks’ Unrealized Losses Explode by $118,400,000,000 in Three Months As FDIC Declares 66 Banks on ‘Problem List’
In its new Quarterly Banking Profile for the fourth quarter of 2024, the Federal Deposit Insurance Corporation (FDIC) says US banks reported a massive $118.4 billion increase in unrealized losses on securities, bringing the total to $482.4 billion.
The FDIC says spikes in longer-term interest rates like the 30-year mortgage and 10-year Treasury rates lowered the value of bank securities, triggering the increase in unrealized losses.
Unrealized losses are the difference between the price banks paid for securities and the current market value of those assets.
Concern over such paper losses played a major role in the collapse of Silicon Valley Bank in 2023, as depositors panicked and withdrew funds after learning the bank sold securities at a steep loss to cover liquidity needs.
In layman's terms: the financial market is heading for a major downturn.
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