282 US Banks Suffer ‘Toxic Combo’ That Could Trigger Collapse, With $900,000,000,000 in Total Assets at Stake: Report

A total of 282 US banks with $900 billion in total assets are suffering from a “toxic combo” that could push them to the brink of failure, according to a new report.

According to the consulting firm Klaros Group, the banks in question simultaneously have large levels of exposure to commercial real estate and significant unrealized losses on their balance sheets, reports CNBC.

Klaros Group won’t disclose the names of the banks that may need to raise capital or merge to survive, fearing the information could spark bank runs.

To compile the list, Klaros looked at regulatory filings known as call reports for 4,000 banks, scanning for firms whose commercial real estate loans are over 300% of capital.

That group was then cross-referenced with banks that also have unrealized losses on bonds and loans which pushed capital levels under 4%.

Klaros co-founder Brian Graham says the size of its list shows regulators have a big challenge ahead.

“If there were just 10 banks that were in trouble, they would have all been taken down and dealt with.

When you’ve got hundreds of banks facing these challenges, the regulators have to walk a bit of a tightrope.”

Of the 282 banks, 16 hold between $10 billion and $100 billion in assets, and the majority of the banks on the list hold less than $10 billion in assets.

Although the names of the financial institutions are shrouded in secrecy, CNBC notes that New York Community Bank (NYCB) is clearly a high profile name on the list.

The bank recently revealed that its losses in the fourth quarter of last year were $2.4 billion worse than previously reported, and $4.165 billion in deposits have exited the bank in the last few months.

 

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