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US bank failure before December?

This market will resolve to "Yes" if any US bank fails between October 22, 2024, 12:00 AM ET, and November 30, 2024, 11:59 PM ET (according to FDIC's "Failed Bank List"). Otherwise, this market will resolve to "No." For this market to resolve to "Yes", the bank's closing date as listed by the FDIC must be within the listed date range. If there is a potential bank failure within this market's date range and FDIC "Failed Bank List" has not been updated yet, this market may remain open to allow for the list to be updated. The primary resolution source for this market will be the Federal Deposit Insurance Corporation (FDIC), specifically the "Failed Bank List" available here: https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/ however other official statements from the FDIC and government entities will suffice.

Event Details

Total Volume: $126.8K
24h Volume: $4.1K
Total Liquidity: $10.7K
Markets: 1
Event Ends: 11/30/2024

Event Analysis

Summary

The prediction market focuses on whether any US bank failures will occur before December 2024, with just days remaining in the forecast period. The FDIC's latest data shows the number of "problem banks" increased to 52 in Q4 2023, with total assets of $66.3 billion at risk. While the banking sector has shown resilience following the stress events of early 2023, ongoing challenges in commercial real estate and rising interest rates continue to create potential vulnerabilities. Given the extremely short time remaining (just 2 days), and no current indications of imminent bank failures in the news or regulatory announcements, the market's strong lean toward "No" (98.9%) appears well-justified. While the banking sector faces various pressures, the likelihood of a failure materializing in the next 48 hours is very low barring a completely unexpected crisis.

Analysis

Economic Background

  • Banking sector performance remains mixed but generally stable:

    • Full-year 2023 net income reached $257 billion despite a 2.3% YoY decline
    • Net operating revenue exceeded $1 trillion for first time
    • Q4 2023 saw sharp income decline of 43.9% due to one-time expenses

  • Key Risk Areas:

    • Commercial Real Estate (CRE) showing deterioration
    • Credit card delinquencies rising
    • Noncurrent loan rate increased to 0.86%
    • 52 banks on FDIC "Problem Bank List" (up from 44)

Outcome Analysis

No Bank Failures (98.9% Market Probability)

Supporting Factors:

  • Just 2 days remaining in forecast period
  • No current news of banks in immediate crisis
  • Domestic deposits rose in Q4 2023 after 7 quarters of decline
  • Overall banking sector remains profitable

Risks:

  • Known vulnerabilities in CRE sector
  • Rising problem bank list
  • Potential for surprise crisis

Bank Failure(s) (1.1% Market Probability)

Supporting Factors:

  • Increased number of problem banks
  • CRE loan quality deterioration
  • Rising interest rate pressures

Challenges:

  • Extremely short timeframe remaining
  • No obvious candidates for immediate failure
  • Regulatory interventions typically planned carefully

Key Factors to Watch

  1. Emergency FDIC announcements
  2. Sudden deposit outflows from regional banks
  3. Major CRE loan defaults
  4. Unexpected market shocks

Recent Developments

  • FDIC March 2024 report showed:
    • Rising problem bank count
    • Increased stress in CRE sector
    • Overall sector resilience despite challenges
  • No immediate crisis signals in recent weeks

Prediction

Given the extremely short time remaining (2 days) and absence of imminent failure signals, I assess a 99.5% probability of no bank failures before December 2024. While the banking sector faces ongoing challenges, the likelihood of a failure materializing in the next 48 hours is extremely low (0.5%) barring a complete surprise crisis.

US bank failure before December?

Yes:0.5%
No:99.5%
Confidence: 9/10
Reasoning Score: 8/10

Sources

Market Options

US bank failure before December?

Yes
0.6%
No
99.4%
Liquidity: $10.7K
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