Nearly 200 more banks may be vulnerable to the same type of risk that took down Silicon Valley Bank: The value of the assets they hold.
There are 186 banks across the country that could fail if half of their depositors quickly withdraw their funds,on the Social Science Research Network found. Even insured depositors — those with $250,000 or less in the bank — could have problems getting their cash if these institutions face the sort of run that Silicon Valley saw a week ago.
In the case of SVB, the Santa Clara, California-based institution parked much of its cash in long-term government bonds, which are ultra-safe in terms of losing the initial investment, but were not worth as much as when SVB bought them, because interest rates have since gone higher. The bank had to sell off some of those bonds to meet customer demands for withdrawals at less than it paid for them, resulting in a nearly $2 billion loss.
Now, the study shows that a slew of those other banks could be vulnerable to the same developments if a high percentage of worried customers start trying to withdraw their deposits.
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