Half of US Banks on Brink of Insolvency

(MENAFN) Recent reports suggest that nearly half of the 4,800 banks in the United States are on the brink of insolvency, having depleted their capital buffers. The Telegraph reported that a group of banking experts have warned about the dire financial state of United States banks. Stanford University's banking expert, Professor Amit Seru, stated that around 50 percent of United States lenders are currently underwater. He added that this issue is not limited to just Silicon Valley Bank and First Republic; rather, the entire United States banking system is potentially insolvent.

The current situation is not without consequences. Last week, First Republic, a San Francisco-based lender, was seized by United States financial regulators and acquired by JPMorgan, the country's largest bank. The acquisition came after First Republic received a USD30 billion deposit from a group of Wall Street banks to stave off collapse. This follows the failure of two regional banks, Silicon Valley Bank and Signature Bank, in March, due to massive deposit runs.

The situation appears to be worsening, with shares of PacWest, based in Los Angeles, and Western Alliance, based in Arizona, being suspended on Thursday after their prices plummeted. The week also saw shares of several other mid-sized United States banks drop by a minimum of 15 percent, causing investor concerns about the financial health of these banks. The situation highlights the need for urgent action to address the financial instability of United States banks.

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