Half of Americas Banks Are Already Insolvent - This is How a Credit Crunch Begins

https://www.telegraph.co.uk/business/2023/05/02/half-of-americas-banks-are-already-insolvent-credit-crunch/

Very interesting article and worth the read. I'm copying/pasting some of the more interesting paragraphs here:

The full shock of monetary tightening by the Fed has yet to hit. A great edifice of debt faces a refinancing cliff-edge over the next six quarters. Only then will we learn whether the US financial system can safely deflate the excess leverage induced by extreme monetary stimulus during the pandemic.

A Hoover Institution report by Prof Seru and a group of banking experts calculates that more than 2,315 US banks are currently sitting on assets worth less than their liabilities. The market value of their loan portfolios is $2 trillion lower than the stated book value.

The White House baulked at a blanket guarantee for all deposits because that would look like social welfare for the rich. Besides, the FDIC has only $127bn of assets (and less very soon) and may ultimately require its own bailout.

The horrible truth is that the world’s superpower central bank has made such a mess of affairs that it has to pick between two poisons: either it capitulates on inflation; or it lets a banking crisis reach systemic proportions. It has chosen a banking crisis.