Part 2/11:
The metaphor of cockroaches hiding in the corners perfectly illustrates the situation: see one problem, and there are likely more. After the collapse of notable banks like Signature, Silicon Valley Bank, and First Republic over the past two years, whispers of a new crisis are growing louder. This time, the issues aren’t confined to small regional banks—they threaten the broader financial infrastructure.
Despite the appearance of stability — markets climbing and confidence remaining intact — many banks are sitting on hundreds of billions of dollars in unrealized losses. Regulators have, so far, allowed them to borrow more funds to keep afloat. But these losses don’t vanish overnight; they are embedded in the assets banks hold, especially in bonds and commercial real estate investments.