Many big banks in the United States have substantially increased their use of an accounting technique that allows them to avoid marking certain assets at their current market value, instead using the face value in their balance sheet calculations.
As of the end of 2022, the bank with the largest amount of assets marked as "Held to maturity" relative to capital was Charles Schwab.
Apart from being structured as a bank, Charles Schwab is a prominent stockbroker and owns TD Ameritrade, another prominent stockbroker.
Charles Schwab had over $173 billion in assets marked as "Held to maturity." Its capital stood at under $37 billion.
An asset ten years from maturity is reduced in present value by 15 percent with a 3 percent increase in the interest rate.
An asset twenty years from maturity is reduced in present value by 15 percent with a 1.5 percent increase in the interest rate.
Central banks can solve liquidity problems while continuing to raise interest rates and fight price inflation, but they cannot solve solvency problems without pivoting monetary policy or through blatant bailouts, which could increase inflation expectations, exacerbating the problem of decreasing valuations of long-term assets.
https://mises.org/wire/charles-schwab-and-other-big-banks-may-be-secretly-insolvent
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