Another subprime crisis in the making? American banks sitting on $750 billion in losses on realty debt-related securities; here are sectors most vulnerable

The US banks have never been this volatile in previous years, other than the 2008 financial crisis, where the financial pillars faced a massive issue, even verging on the point of crashing down. Meanwhile, things could down the similar line under recent circumstances as there are losses reported in realty debt-related securities, amounting to a whopping $750 billion. Even though there are multiple safety valves in place by the Fed at this point, that may still not be enough to prevent a financial crisis if various market factors keep mounting due pressure, with the US elections' uncertainty taking the primary lead in this issue.

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Bank losses mounting, US economy could be in crisis

The reported losses of $750 billion is roughly whopping seven times more than banks held in 2008. There are many unrealized losses also doing the rounds, which are very important for reporting bank profits. Even though banks have been able to subside similar issues in the past, but there is no saying as to what might happen this time if this loss-making spree continues over time. One of those banks spearheading this crisis is Bank of America, which has undertaken a $116 billion hit to its HTM portfolio in the past three years, which is a whopping figure as far as losses go.


If the worst-case scenario arrives for the US banks in the coming days, the US economy could be at a major risk, and would solely depend on what calls the US Federal Reserve takes on handling the crisis, primarily revolving around interest rates.

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FAQs:

Are US banks facing losses?
As much as $750 billion in losses have been reported by US banks over time, a figure that is sending shockwaves across the financial markets.

Is the US election creating problems in the financial stocks?
The stock market is indeed feeling the impact of the US elections' mounting uncertainty, as both candidates are trying to get an edge over each other in the poll race.