What are two risks that banks face?

Answer 1

In The United States banks face two risks and more than that. Here are a few:

A. The bank cannot find enough commercial organizations to which they can extend a lines of credit. ( bottom line: not enough commercial customers );

B. The bank suffers losses due to a large number of non performing loans;

C. The bank finds itself at the Federal Reserves overnight loan window too many times because it needs funds to meet the next day's obligations; the Fed then has to investigate this problem;

D. The bank produces too many bad trades in its Treasury Dept. And/or bad trades are concealed and when they are discovered, the losses are staggering and they need the Federal Reserve to bail them out ( temporarily ) The Fed will tend to help larger banks over smaller ones as the collapse of a large bank is a large problem;

E. The bank faces an unfriendly bid to take it over by the purchase of too many shares by an unfriendly suitor; The Federal Reserve Bank will oversee any such takeover..