US banking crisis: Close to 190 banks could collapse, according to study (yahoo.com)
Our calculations imply that banks are much more fragile to uninsured depositors runs
after the tightening. Suppose that all uninsured depositors were to withdraw funds from U.S. banks. Table
2 shows that 1,619 U.S. banks would have negative insured deposit coverage, suggesting insured deposits
would be impaired. While the median bank is small, with assets of $0.3BN, the aggregate losses would be
large, and would involve $2.6T of aggregate deposits, and a shortfall for the deposit insurance fund of
$300BN. This would provide the FDIC with enormous incentives to intervene during a run, such as in the
case of SVB, and thus in fact provide incentives for uninsured depositors to run.
There has also been another rate hike since the study was done, which means the 186 bank figure is outdated. LS
Obviously if we have a recession in the next few years, more banks will be at risk. LS