US banks see outflow of nearly $100 billion in deposits

CNBC reported that US banks’ customers pulled nearly $100 billion in deposits a few days after the collapse of Silicon Valley Bank. Despite the ongoing turmoil in the US banking sector, regulators assure the public that the banking system is safe. Fresh US Fed data showed that bank customers collectively withdrew $98.4 billion from their accounts after the SVB crash. The withdrawals were made from small banks and represented about 0.6%. Total deposits were brought down to $17.5 trillion. Meanwhile, the US banking sector has been crippling since mid-March. Earlier, California state regulators banned the operation of SVB, one of the top 20 largest commercial banks in the US. Economists assume that this was the largest bankruptcy among US banks after the global financial crisis of 2008. As a result, all insured deposits were transferred to Deposit Insurance National Bank of Santa Clara. In addition, the US authorities shut down large New York-based Signature Bank and cryptocurrency bank Silvergate, fearing a systemic risk of the financial sector. Analysts estimate that the US government will have to pour nearly $2 trillion into the financial system to save the banking sector. Besides, another 50 financial institutions are at risk of bankruptcy. Earlier, American economists noted in Social Science Research Network that uninsured clients can withdraw funds from banks en masse amid the panic. Thus, 186 credit institutions are highly likely to face problems, experiencing a shortage of assets.