Recent data released by the Federal Reserve shed light on the massive outflow of funds from US financial institutions during the last calendar year.
Since May of 2022, American banks have lost a staggering $910 billion in deposits, as reported by data from the Federal Reserve Economic Data (FRED) system.
Banks had a total of $18.06 trillion in deposits as of May of last year. The current figure is $17.15 trillion, a decrease of $1. And in the past week alone, $13 billion has left the financial system.
Following the fall of Swiss banking behemoth Credit Suisse and the US regional banks Signature Bank, Silicon Valley Bank, and First Republic, bank stocks throughout the world have taken a beating.
Traders on Wall Street have been especially harsh on Los Angeles-based PacWest and Phoenix-based Western Alliance.
Both banks have issued statements saying that they have not seen any unusual withdrawal activity after March 31.
The fresh withdrawal figures come after the Fed made public its assessment that over 700 US banks face “significant safety and soundness risk” owing to unrealized losses exceeding 50% of their capital.
The Fed blames its own interest rate rises for putting those banks in a difficult situation. After raising interest rates by 25 basis points on May 3rd, Federal Reserve Chair Jerome Powell stated his confidence in a “sound and resilient” banking system and noted an overall improvement in the industry from early March.
At the time of publication, 15.5% of traders using CME Group’s FedWatch tool expected Powell to hike rates again in one month.
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