What securities do FDIC-insured banks hold?

According to a new analysis from the FRED Blog at the St. Louis Federal Reserve, mortgage-backed securities comprise nearly two-thirds of the assets held by FDIC-insured banks—sixty point seven percent. The remaining portfolio includes U.S. Treasury securities at thirty-three point five percent and state and municipal bonds at five point eight percent. This mix hasn't remained constant. Since two thousand and eight, the share of mortgage-backed securities has declined while banks have increased their holdings of Treasuries and municipal bonds. Researchers at the Kansas City Federal Reserve attribute this shift to regulatory changes and evolving attitudes toward risk. More recently, banks have adopted a strategy of holding more securities until maturity—currently thirty-nine point eight percent—to protect their capital reserves against financial risk.

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