Under the hood

Of the U.S. banking system

From Tuomas Malinen’s Forecasting Newsletter.

Issued discussed:

• Liquidity in many U.S. banks has declined between Q1 and Q2, in some cases heavily.

• If there’s no liquidity to cover for deposit outflows, a bank fails.

• U.S. authorities are currently engaged in a desperate battle to shore up the banking sector.

We have been analyzing the health of the U.S. banking sector and during the past week we have been concentrating on the changes between Q1 and Q2. I have to say that the findings are not encouraging.

The health of four banks had deteriorated to a point that we issued our first-ever warning to our customer to pull money out them. I strongly encourage you the check it, if you reside in the U.S. and/or have deposits in the U.S. banking system.

In this entry, I will present the main (i.e., the macro-level) findings of our analysis. They tell a story of continuing, yet uneven decline of the U.S. banking sector.

Declining liquidity