Accoridng to the latest reports, it seems that there are $100 billion that exited the US banking system in three months. Check out the latest news below.
$100 billion exists US banking system
According to Kevin O’Leary, a prominent figure on Shark Tank, the US banking system is going through a phase of significant consolidation due to a lack of trust in the financial sector.
In a recent interview with Fox News, he noted that the number of regional banks in the country is likely to decrease by half in the coming years.
He predicts that around 2,000 of the 4,100 regional banks in America will merge in the near future.
This is due to people being hesitant to keep their money in banks, as they fear losing it in the event of another bank failure. As it stands, customers are only guaranteed up to $250,000 in such cases.
Recent data reveals that for five consecutive quarters, depositors have been withdrawing money from the US banking system. This prediction comes from O’Leary amidst this development.
The Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg reports that total deposits decreased from $18.7 trillion at the end of Q1 to $18.6 trillion at the end of Q2, indicating a quarter-over-quarter drop of $100 billion.
Although the rate of deposit flight has reduced, Gruenberg notes that Americans are still withdrawing funds from banks to explore other opportunities that offer higher interest.
“Total deposits were $18.6 trillion, down 0.5 percent quarter over quarter, a reduction from the 2.5% decline reported in the first quarter.”
He continued and stated the following:
“In the second quarter, we observed the continuation of the trend in which customers are actively seeking higher yields.
Lower-earning accounts such as transaction, money market deposit, and other savings accounts declined by $412.8 billion during the quarter, while time deposits increased by $306.7 billion.”
Stay tuned for more news about the matter and make sure to also keep your eyes on the crypto market.
