Hundreds of American banks are insolvent – leading economist Nouriel Roubini warns

Washington – Leading economist Nouriel Roubini gave a sensational warning that hundreds of banks in America have already gone bankrupt. In an article written under Project Syndicate, Roubini warned that US banks could lose up to 80 percent of their available capital through unrealized losses. In just one week last month, three US banks went bankrupt. After that, the issue of crisis in the banking sector and possible economic recession has come up.

In March, US banks ‘Silicon Valley Bank’, ‘Silvergate’ and ‘Signature Bank’ collapsed in just seven days. After that, the bank ‘First Republic Bank’ was also in financial trouble. Although the country’s leading banks, including the Biden administration in the United States, have provided financial support to the bank, the crisis in the bank has not been completely avoided. The collapse of banks one after the other in this way happened earlier in 2008. After that, the global economy, including the United States, was hit hard by the recession. Therefore, the fall in the banking sector last month also attracted attention.

After this collapse, various economists and analysts in the United States began to draw attention to the consequences of the crisis in the banking sector. Four economists active in leading American universities also published a report on the banking sector. It warned that 200 American banks are on the brink of crisis and account holders and other customers could lose as much as $300 billion. It was shockingly claimed that the extent to which US banks have shown their capital and assets is less than two lakh crore (trillion) dollars.

Economist Nouriel Roubini, who successfully predicted the recession of 2008, warned in stark terms that this was just the beginning of the bloodshed to come. A recent article by Roubini pointed out the magnitude of the crisis in the banking sector. Roubini has made aware in his article that the American banks have invested heavily in the bonds of the Federal Reserve.

As the Federal Reserve raises interest rates, banks’ profits on investments in debt securities have declined. Due to this, the banks have suffered huge financial losses. However, many banks have not shown this openly in their balance sheets. But through various statistics that have come out in the last few months, this loss is said to be around $620 billion. But this does not include the depreciation of the banks’ other investments. The financial hit figure could reach $1.75 trillion if it holds up. Roubini claimed that this amount covers almost 80 percent of the capital held by American Bank.

‘When all the statistics are put together, almost all banks in the United States appear to be technically close to bankruptcy. Besides, Hundreds of them have gone bankrupt,’ said economist Roubini. Earlier in 2008-09, during the economic recession in the world, including the US, banks had sunk to a large extent. Roubini’s warning indicates that the same will be repeated. Therefore, the global recession seems to have deepened.

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