U.S. Banks are sitting on $1.7 trillion in unrealized losses

The collapse of several banks has raised concerns about the safety of the US banking system. Regulators and business leaders have been assuring consumers that banks are safe, and that the potential for contagion throughout the financial system is slim. Rising interest rates have led to unrealized losses, and US banks had unrealized losses of $1.7 trillion at the end of 2022. Nearly $7 trillion of the $17 trillion in total US bank deposits are currently not insured by the FDIC. If half of these uninsured depositors decide to withdraw their funds after recent bank instability, it could put hundreds of billions of dollars of deposits in jeopardy. Some politicians and analysts have argued that the Fed should backstop every type of depositor at all banks to prevent further bank runs from the public.