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Study finds 186 banks vulnerable to Silicon Valley Bank-like collapse

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nearly 200 U.S. banks could be vulnerable to the same fate as Silicon Valley Bank (SVB).A recent Social Science Research Network study suggests that 186 American banks could fail if half of their depositors suddenly withdrew their funds.

The researchers formulated a speculative scenario in which each bank experienced a run, and concluded that the FDIC would run out of money.The study was published shortly after the collapse of SVB, the worst American financial institution failure since 2008."Our calculations suggest these banks are certainly at a potential risk of a run, absent other government intervention or recapitalization," the economists wrote.General views of the SVB, Silicon Valley Bank branch on March 17, 2023 in Beverly Hills, California. (Photo by AaronP/Bauer-Griffin/GC Images) SEN KENNEDY SAYS SVB BAILOUT COULD HAVE BEEN AVOIDED: ‘BONE DEEP, DOWN-TO-THE-MARROW STUPID’"Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk," the study's abstract reads. "If uninsured deposit withdrawals cause even small fire sales, substantially more banks are at risk."The issue lies in the fact that the studied banks' assets are in government bonds and mortgage backed securities, which were negatively affected by the Federal Reserve's recent interest rate hikes.MORE 'WOKE' COMPANIES ARE GOING TO FAIL, FORMER CEO WARNS: SVB COLLAPSE WAS 'PERFECT STORM'Many of SVB's assets were long-term government bonds.

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Bank failures, bailouts divide Congress on next steps
WASHINGTON (AP) - Bills were filed, hearings were planned and blame was cast as Congress reacted this past week to the abrupt failure of two banks. A look at what lawmakers are saying and planning as the fallout continues from the collapse of Silicon Valley Bank and Signature Bank.While President Joe Biden called Monday on Congress to strengthen the rules for banks to prevent future failures, lawmakers are divided on whether any legislation is needed.Some congressional leaders are skeptical that a closely divided Congress will act at all."There’s people who are going to choose bills, but I cannot imagine that, with the hold banks have on Republican members of Congress, that we can pass anything significant," said Sen. Sherrod Brown, D-Ohio, chairman of the Senate Banking, Housing and Urban Affairs Committee.Republicans say the laws already in place were sufficient to prevent the bank failures, if only regulators had done their job by spotting obvious problems and directing the banks to take steps that would reduce their risk."If there are ideas out there that people have, you know, at some point, we would be willing to entertain those, but I think it would be premature to start talking about solutions before we fully define the problem and ultimately get answers from the regulators about why they were asleep at the job," said Sen.
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