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Due to rising interest rates, many US regional banks have gone bankrupt in recent months. They faced huge losses on the debt they bought during the Fed’s loose monetary policy. Bank of America also invested heavily in fixed-income assets during that period, so that the big bank faced an unrealized loss of about $100 billion at the end of the first quarter.
Why is this important?
In the second quarter of this year, the US banking sector was under pressure. Several banks went bankrupt, including Silicon Valley Bank and Signature Bank, as customers massively moved their deposits away from banks. As a result, they had to sell low-interest debt to pay everyone back. Admittedly, the value of these securities has plummeted as a result of the Fed’s tightening monetary policy.In the news: Bank of America invested most of its $670 billion in corona-era deposits three years ago in the bond market when interest rates were still very low. These investments saddled the big American bank with an unrealized loss of about $100 billion. This writes the financial times Based on data from the Federal Deposit Insurance Corporation (FDIC).
- Bank of America loss is good for a fifth
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