HomeNews282 US Banks Vulnerable to Collapse, Seek Refuge in Bitcoin, Ethereum, XRP

282 US Banks Vulnerable to Collapse, Seek Refuge in Bitcoin, Ethereum, XRP

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  • Klaros Group found 282 banks with substantial commercial real estate exposure and large unrealized losses that could fail.
  • Regulators must use sensitivity to ensure sector stability due to the size of affected banks.

According to CNBC, a Klaros Group analysis has raised concerns about an impending crisis in the US financial sector.

Based on 4,000 banks’ regulatory filings, their analysis finds that 282 institutions, holding a total of $900 billion in assets, are vulnerable because of a risky combination of large unrealized losses on their books and a strong exposure to commercial real estate.

Increasing Dangers

The Klaros Group identified two significant issues: these banks’ substantial capital erosion from unrealized losses on bonds and loans, which typically exceed 300% of their total capital, and their strong reliance on commercial real estate lending.

The sheer number of banks impacted, as pointed out by Brian Graham, co-founder of the Klaros Group, poses a difficult task for authorities.

The current crisis requires a delicate regulatory balance to prevent the financial industry from becoming even more unstable, unlike situations with a few problematic institutions.

Smaller banks with assets of less than ten billion dollars are the ones that are most vulnerable to the crisis, despite the fact that several larger banks with assets ranging from ten billion to one hundred billion dollars are also affected. This shows that the problem affects large, local, and regional banks across the industry.

The Example of the New York Community Bank

Among these crises, New York Community Bank stands out as an important example. According to its most recent financial statements, the bank is in a terrible situation. Notable deposit withdrawals of $4.165 billion and fourth-quarter losses that were $2.4 billion higher than expected indicate the problem.

This instance illustrates the practical ramifications of the problems noted in the Klaros Group report, highlighting the impact on the banks and their clients.

Take Solace in XRP, Ethereum, and Bitcoin

Following the impending catastrophe reflected by the perilous state of 282 U.S. banks, savers and investors are turning more and more to alternative assets like XRP, Ethereum, and Bitcoin as possible safe havens.

Previously, Bitcoin whales have risen because of conventional banking instability, as shown by 282 U.S. institutions’ vulnerabilities. As ETHNews has reported, this surge in Bitcoin worth correlates with a rise in bank investments in cryptocurrencies, indicating a huge financial ecosystem realignment.

Digital currencies may be a safe haven despite banking instability. Cryptocurrencies’ decentralization and transparency appeal to market participants seeking stability in the volatile financial landscape. The Klaros Group found weaknesses in traditional banks.

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Syofri is an active forex and crypto trader who has been diligently writing the latest news related to the digital asset sector for the past six years. He enjoys maintaining a balance between investing, playing music, and observing how the world evolves. Business Email: info@ethnews.com Phone: +49 160 92211628