Unrealized losses on banks’ balance sheets

 

Banks are sitting on around $517 billion in unrealized losses on their balance sheets, according to data from the Federal Deposit Insurance Corp. 

The bank regulator said in May the amount has been “unusually high” for nearly 2½ years.

Most of that is because banks bought government bonds such as Treasurys and mortgage-backed securities when interest rates were low and banks were flush with customers’ deposits during the pandemic. 

When the Federal Reserve started to raise rates in 2022, the carrying value of these bonds declined. (Bonds sell at a discount when rates go up to offer investors higher yields.)

 Wall Street Journal 10 July 2024

https://www.wsj.com/finance/banking/bank-earnings-season-charts-4fa221cc

‘Silicon Valley Bank is just the tip of the iceberg’

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