$2 Trillion Unrealized Losses Could Decimate US Bank Equity – Turmoil Ahead in the Banking Sector

US$2 Trillion: The ALARMING NUMBER that has finance professionals reaching for the bottle. Staggering $2 Trillion in unrealized losses sitting in securities portfolios of US commercial banks (or 9% of assets). If all such assets were marked to market, US banks’ equity base would be wiped out as their equity-to-asset ratio is 9.4%. Does it mean that US banks effectively have zero equity today? The ongoing deposit runs are fuelling the forced selling of securities, which shows no sign of abating anytime soon. Investors should expect volatility to stay high and many bankruptcies of US banks ahead unless FED will go mad with uncontrolled money printing and balance sheet increase.