Over 2000 US banks are on the verge of bankruptcy

Washington: Hoover Institute has warned that 2000 banks in the United States are on the verge of bankruptcy. A few days back, JP Morgan Chase announced the takeover of First Republic Bank. This was the fourth bank to have collapsed in the last three months. The failure of the First Republic may not be the last one, as the banking crisis is looming over the US economy.

In March, three banks in the United States collapsed within a few days, including the SVB, Signature and Silverglate. First Republic Bank’s name started to prop up as soon as other banks collapsed. The major reason known for the failure is the large percentage of unsecured deposits. The Biden administration financially supported the collapsing SVB and Signature Bank in a month.

The Federal Reserve and the Biden government have assured that things are stable and there is no possibility of a major crisis. However, major analysts, economists and think tanks in the United States are warning US citizens about the looming banking crisis. In a recent survey, about 48% of US citizens are shown to have no trust in banking for their deposits.

A new report by Amit Seru and his colleagues from the Hoover Institution talks about the crisis in the banking sector, which mentioned that out of the total 4,800 banks in the United States, nearly 2,315 banks are in bankruptcy. Amit Seru pointed out that the debts of these banks are higher than their assets, and the cumulative number is around two trillion dollars.

The list of banks includes small or medium banks and large and multinational banks. One such bank out of the top 10 is an international bank in a precarious situation with over a trillion dollars in assets. While the other three banks are considered among the big banks in the United States. He also sensationally claimed that the problem was not limited to Silicon Valley Bank or the First Republic Bank but that a large part of the US banking sector was bankrupt.

When the report of Hoover Institution was released, a sharp fall in share prices was seen in the two US banks, namely the Pacific Western and the Western Alliance. There is a high possibility for these banks to face a situation of insufficient funds in the next few days. The leading financial institution JP Morgan has informed that the investors have increased their investment in gold to a large extent even as the banking crisis in the United States is taking a serious form. It was said that institutional investors are included among those increasing investment in gold.