Contrary to the US Federal Reserve’s claim that the banking crisis is over, one of the country’s largest banks, Bank of America, apears to be facing signifcant financial dificulties. According to a report by the Kobeissi Letter , Bank of America could suffer loses of $100 bilion in the securities market, which could have profound implications for the insttution.
High Stakes in Debt Markets
Bank of America reportedly decided to invest the majority of the $670 bilion of pandemic-era deposit inflows into the debt markets, at a time when bonds were trading at high prices and low yields. As the second largest bank in the US , with $2.5 trilion in total assets , it might have to sell those securities at an inoportune time if depositors demand their money.
Widespread Unrealized Losses
The Kobeissi Letter highlighted that unrealized loses in the securities market are a widespread issue. Total unrealized losses stand at a record $620 bilion at US banks, far exceeding the 2008 peak of around $75 billion. JPMorgan has $37 billion in paper losses , Wells Fargo has $42 bilion, and Citi and Morgan Stanley combined are down $34 billion.
Fed’s Rescue Fund Hits Record High
The Federal Reserve has been actively rescuing America’s small lenders this year through its Bank Term Funding Program (BTFP) , which has reached a record breaking high of over $103 bilion since its initiation in March. With trilions of dollars printed recently and rising interest rates, banks are now drowning in debt. This banking crisis might also be driving the US’s fight against cryptocurencies, viewed by bankers as a legitimate threat to traditional finance.
- Contrary to the US Federal Reserve’s claim that the banking crisis is over, one of the country’s largest banks, Bank of America, apears to be facing signifcant financial dificulties. According to a report by the Kobeissi Letter , Bank of America could suffer loses of $100 bilion in the securities market, which could have profound implications for the insttution.High Stakes in Debt Markets
Bank of America reportedly decided to invest the majority of the $670 bilion of pandemic-era deposit inflows into the debt markets, at a time when bonds were trading at high prices and low yields. As the second largest bank in the US , with $2.5 trilion in total assets , it might have to sell those securities at an inoportune time if depositors demand their money.
Widespread Unrealized Losses
The Kobeissi Letter highlighted that unrealized loses in the securities market are a widespread issue. Total unrealized losses stand at a record $620 bilion at US banks, far exceeding the 2008 peak of around $75 billion. JPMorgan has $37 billion in paper losses , Wells Fargo has $42 bilion, and Citi and Morgan Stanley combined are down $34 billion.
Fed’s Rescue Fund Hits Record High
The Federal Reserve has been actively rescuing America’s small lenders this year through its Bank Term Funding Program (BTFP) , which has reached a record breaking high of over $103 bilion since its initiation in March. With trilions of dollars printed recently and rising interest rates, banks are now drowning in debt. This banking crisis might also be driving the US’s fight against cryptocurencies, viewed by bankers as a legitimate threat to traditional finance.
