In 2025, U.S. banks are confronting heightened risks stemming from bond portfolios, interest rate volatility, and interest rate swaps, which have contributed to a staggering $482 billion in unrealized losses as of the first quarter. President Donald Trump's aggressive push for the Federal Reserve to lower interest rates has introduced additional uncertainty, potentially exacerbating these vulnerabilities. The 63 banks on the FDIC's Problem Bank List, with a combined $82 billion in assets, represent approximately 1.3% of the 4,500 U.S. banks, and failures among these institutions could cost the FDIC's Deposit Insurance Fund (DIF) between $20 billion and $30 billion. Trump's demands, expressed repeatedly through various channels such as his appearances at Davos and posts on social media, challenge the Fed's independence and risk inflation and market instability, amplifying the stress on banks.

One significant root cause of risk involves low-yield bonds, including Treasuries and mortgage-backed securities purchased before 2022, which have lost value due to the increase in interest rates from 0% in 2021 to between 5.25% and 5.5% by 2023. This has resulted in unrealized losses totaling $482 billion as of Q1 2025. Forced sales of these bonds to meet liquidity needs can crystallize these losses, eroding capital. The financial gravity of this situation is severe, as these losses account for about 20% of the sector's total capital of $2.4 trillion. If forced sales occur, they could trigger additional capital losses between $50 billion and $100 billion, potentially pushing 10% to 20% of banks into insolvency. The collapse of Silicon Valley Bank (SVB) in 2023, which incurred a $1.8 billion loss, highlights these systemic risks.