Banks sit in the lost $ 500 billion and the stagflation may cause a crisis like another Silicon Valley Bank

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• Banks “follow the product” and took great loss When we drastic interest rates to combat inflation in the federal reserve. These losses are still hung and several experts said Fortune 2023 Many basic problems from the banking crisis are a sustainable threat to the system if economic conditions deteriorate.

Only two years later collapse one Silicone Valley Bank and the first republic, banks still give a lot of loss thanks to high Interest rates. The reason why several specialists who cause the main concern Fortuneespecially President Donald Trump’s tariffs causing a dreadful combination “dilution“Or increasing inflation of inflation, growing inflation, by showing additional pressure on lending.

US banks accounted for $ 482.4 billion in total losses in accordance with securities investments in late 2024. according to Federal Savings Insurance Corporation data, an increase of $ 118 billion or 32.5% from the previous quarter. This number rose to $ 515 billion when the svine was fell into the victim bank employee In March 2023, the same year reached $ 684 billion. Data for the first quarter of 2025 This means that this week is expected in this week, but the April-leap in band products means that in the first three months of the year, a candle is short.

These unrealistic losses are not sold in the bank’s profit and profit statement, but they represent a threat to liquidity for liquidity when depositors are be in a swarmA financial professor rebel Cole at the University of Atlantic, Florida, who works ten years in the federal reserve system.

“All this is a bad news story about any of these banks and (2023) also said in March (2023),” Cole serving as the International Monetary Fund and the World Bank Special Adviser. Fortune. “I am astonishing that there has been no one since then.”

See this interactive chart on Fortune.com

There is an easy explanation for the table above: long-term interest rates are increasing the value of assets such as securities supported by long dated debt or residential mortgage.

The bank’s loss is essentially waved by a 10-year treasury product, Cole, A wild walk Inside the spread of the chaotic tariff of the Trump Administration in 2025. Currently, it sits in the fourth quarter and above 4.5%.

At this level the banking system begins “see serious problems”, Seru Amit Seru, a financial professor in Stanford Graduate Work School, in an email statement Fortune.

“This is very bad in 5%,” “The university added a seru of conservative visual thinking in the Hoover Organization.

Cole, $ 600 billion will be equal to $ 700 billion, he will be equal to investment losses.

As the diagram shows, most of these securities has been appointed As “maturity”. Changes in market value changes are not reflected in the financial statements of banks and are released in the balance sheet instead because it is not intended to be sold.

However, when the lender has to download some of these investments, Cole should be noted for the entire portfolio market. This means that in this technical terms, liquid assets are in the opposite for the purposes of banks.

“It’s like a rock hanging on the neck of banks,” Cole said.

Meanwhile, losses on “existing” securities for sale are recorded in the financial statements, but do not earn a profit if assets are not sold. The difference for Cole creates a little difference. SVB’s rapid demolition, he announced that he would lose $ 2 billion after the bank’s arrival erase existing securities for sale.

“Three days later, they closed,” said Cole.

The next bank crisis only needs ‘a spark’

Failure of the technology industry Previous lender He sent shock waves through the financial system and symbolized a grossly stupid “affect“When interest rates go to zero during the tough-19 pandemia, the short-term Treasury documents of the United States have provided less returns by taking part in the deposits.

In a slightly moderate search, banks are lower than $ 2 trillion and similar assets for investment securities such as long-term US treasures, and mortgage supported securities and similar assets.

In 2022, the Fed insisted that it will increase the rates of interest to solve only what he considers “transient“Inflation. Instead, the price increase was for four decades and central bank, in March 2022, in March 2022, more than about 0% to 4.5% after 4.5% of the federal equipment.

SVB, which has been 90% of the payment portfolio, which is 90% of the payment portfolio, which has been held in the treasures, which is supported by mortgages, municipal bonds and more than 10 years, has not been adulthood, the second largest bank History of the US. Less than two months, the first republic pass SVB is on this list.

Despite insurance depositors intact and feeding for the purchase of both banks, the traces of the crisis and ripple effects are still stretched.

The fragility of the SVB turns out to the regulators. Seru said they were more employed in the problems of interest rate risk and depositor flight. However, many of the main problems continue, because capital requirements are still limited to many parts of the banking system, regardless of non-real losses on securities and loans.

“Thus, if we do not see another crisis exactly, there are still substances for stress – especially if the macroeconomic conditions worsen,” Seru wrote.

And as interest rates remain high, banks collected during the crisis are still hanging.

“In the stagflation scenario, the risk, ratios are longer and credit losses, especially for lending, especially low coverage, especially low coverage, special capital giant chief economist Apollo Global Management, write Monday in a note.

Meanwhile, Cole sees an additional pressure from a crisis from a commercial real estate in commercial real estate, if investing losses are increasingly sensitive, he said. He is state-owned for FDIC’s 250,000-dollars for the insurance, a large exposure of state companies, which are large exposed to depositors, especially for the regional and super regional banks, especially $ 200 billion.

“If there is an unrealistic loss in the securities portfolio, they cannot answer one of the runs,” Cole said. “Then they will be forced to market and the regulators will close them.”

In short, the banks face the “nightmare scenario” and sit on Tinderbox.

“And only goes to take a spark,” said Cole.

This story was first displayed Fortune.com

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