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Biden Policies Lead to $517 Billion in Unrealized Losses for US Banks in Q1 2024

Amidst the economic policies of President Biden, troubles continue to mount for the US banking sector. A recent report from the FDIC reveals staggering unrealized losses of $517 billion for banks in the first quarter of 2024. This marks a significant increase of $39 billion from the previous quarter, driven primarily by higher losses on residential mortgage-backed securities due to climbing mortgage rates. 

 

The prolonged streak of unrealized losses now spans ten consecutive quarters, surpassing the duration of the 2008 Financial Crisis. With the resurgence of “higher for longer” mortgage rates, there is a bleak outlook for the banking sector, with anticipated ongoing increases in unrealized losses.

The FDIC has flagged 63 banks as precariously close to collapse, following the conclusion of the Fed’s emergency lending program for banks just two months prior. Regional banks, still reeling from the aftermath of the previous financial crisis, now face the looming threat of another meltdown.

In contrast to the struggles of US banks, the BRICS alliance, which includes nations like China, has been strengthening its financial position by accumulating gold and reducing US treasuries. As the US banking system grapples with over half a trillion dollars in unrealized losses, the BRICS nations’ focus on de-dollarization and bolstering their banking systems presents a stark contrast.

With the number of problem banks on the rise and the increasing pressure on the US banking system evident, there is a growing need for vigilance among investors. Diversification and considering assets like gold and silver as safeguards against financial instability become paramount in such uncertain times. As seen in recent developments, relying solely on traditional banking systems may pose risks, prompting a reevaluation of financial strategies to navigate the current economic landscape.

Written by Staff Reports

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