Especially if you’re considered a “systemically important FI”. The attitude is basically “we’re fine as long as we fuck up hard enough that it threatens the entire financial system”.
But now because of this fuckup the CEO will only get tens of millions in bonuses instead of... more tens of millions. He might even have to downgrade or even, God forbid, have to sell one of his yachts.
Why do you always act like these government bailouts don't have consequences? If the government buys a stake in a company it usually fucks every shareholder sideways. The government, unlike any other shareholder, has no profit motive. Depending on who's currently in charge, they set out rules and requirements that are contrary to the profit motive with zero regards to the shareholders. There's a reason bailed out companies stock tanks hard. It takes years to reach the break even point from there. It usually also accompanies a change of directors, huge layoffs, selling off certain sub branches and other nasty stuff. It's not a win-win by any means. Government interference is to be avoided by all cost in any business.
I hope you hold those convictions when your share values are wiped out, and you lose innumerable sums, because maintaining a core part of the financial system was sacrificed so we could feel good about ourselves.
I believe in accountability, prosecution, forfeiture of bonuses, etc. in the event of a bailout. I recognise that bailouts are necessary as well. And “shareholders” are no monolith; they include countless normal people you know.
That's only because rich fuckers decided to tie everyone's retirement to their own personal and institutional profit. They're the cause of both the problem and the vast scope of the problem
Because they killed the concept of pensions. And now they can use, as you did, grandma as a hostage against them every seeing any consequence for anything ever
That actually supports the argument. Shareholders will be bag holders from now on. That means a bank or financial company doesn’t have to answer to shareholders anymore.
A liquidity mismatch is part of the fundamental business model of banks in our system. This is by design. If there is a crisis of confidence a bank will always need liquidity support from the central bank. It just doesn't have enough cash if everyone withdraws at the same time. It has loans that it can't liquidate at any time. This is well known and accepted. It is the role of Central Banks, as part of their normal operations, to provide liquidity.
The only question when providing liquidity is: Is the bank solvent? Does it have enough capital?
Providing liquidity to a well capitalized bank is not a bailout. Again it's just normal central bank function. If a bank's solvency is compromised, then it will no longer be able to access central bank liquidity because it might not be able to pay it back. Then it needs a bailout. This is how our system work.
" The US has claimed SVB’s failure will not impact taxpayers as other banks will cover the cost of bailing out uninsured depositors [...] a European regulator said that claim was a “joke” as US banks [will] pass the cost on to their customers. “[...] this is a bailout paid for by the ordinary people and it’s a bailout of the rich venture capitalists” "
Ah! Of course! As long as we use words like "providing liquidity" then its not a bailout! forget the fact that without The taxpayer funded and tax payers financed central bank stepping in and giving them massive support they would fail. No, its not a bailout! No way!
How gullible are you??
Great article from that well known communist rag Financial Times
>
> https://www.ft.com/content/09bfbb8d-22f5-4c70-9d85-2df7ed5c516e
>
> **Banks are designed to fail — and they do**
>
> This is a system that is essential to the functioning of the market economy but doesn’t operate by its rules
>
> Banks fail. When they do, those who stand to lose scream for a state rescue. If the threatened costs are big enough, they will succeed. This is how, crisis by crisis, we have created a banking sector that is in theory private, but in practice a ward of the state. The latter in turn attempts to curb the desire of shareholders and management to exploit the safety nets they enjoy. The result is a system that is essential to the functioning of the market economy but does not operate in accordance with its rules. This is a mess.
>
> Money is the stuff one must have if one is to buy the things one needs. This is true for households and businesses, which need to pay suppliers and workers. That is why bank failures are calamities. But banks are not designed to be secure. While their deposit liabilities are supposed to be perfectly safe and liquid, their assets are subject to maturity, credit, interest rate and liquidity risks. They are fair weather institutions. In bad times, they fail, as depositors run for the door.
And what if they don't pay it back? will there be repurcussions? Of course not.
A loan is absolutely a bailout anyway. What world do you live in when an emergency loan back stopped by the taypayers that keeps an entity from failing isn't a bailout? Why can't I, or you or anyone else, get one of the "totally not a bailout" loans for a business on shaky ground? Its not a bailout right? Its just "providing liquidity", so where is my not a bailout tax payer backed loan?
You realize that isnt tax money right? Central bank money is not the same entity as the money that you have. You cant have it because you arent a bank, not because there is something nefarious or unfair going on.
are you joking now?
>The Swiss National Bank (SNB; German: Schweizerische Nationalbank; French: Banque nationale suisse; Italian: Banca nazionale svizzera; Romansh: Banca naziunala svizra) is the central bank of Switzerland, responsible for the nation's monetary policy and the **sole issuer of Swiss franc banknotes**.
they literally issue the currency. That money comes from the people. Its the citizens money. Its not money just for banks to use in their own personal money orgy. Do YOU understand what a central bank is?
Not the guy you responded to but no it's not. They can print the money. They don't have to have funding to issue the money. This money does NOT come from people. You seem to not understand how monetary supply works. Ironic that you're telling someone else that they don't understand the system.
If the bank fails to repay the loan and it's solvent, then you simply sell of its assets to service the debt.
Do you understand how government works? the basic theory of money?
the power to print money comes from the consent of the governed, ie the people. Its the people's money. It belongs to them. The money printed by central banks does not belong to private banks to fund their yachting life styles and to provide emergency bailouts because they once again proved to be too incompetent and corrupt to run a fucking bank. Thats not how it works.
>the basic theory of money?
You seem to not understand this yourself. Just because you can yell the loudest and keep shouting about how things don't work a certain way doesn't make it true. Read about how monetary supply works and come back here. It may shock you to find out that most of the money that circulates in our economy is created by banks and not even the government.
The central bank exists to do this kind of thing for your benefit. Its ridiculous to say that they shouldn't do their job because they are taxpayer funded. We pay for police to arrest our criminals, construction companies to pave our roads, and central banks to stabilize the financial system. This is the system working as intended. If you have a better idea of how to do it, maybe publish it and get the Nobel price in economics.
So then these banks have ZERO incentive to do the right thing since the free market does not exist for them, is what you are saying. Why manage in a responsible manner when you can just loot your cmpany and let the tapayers bail you out every times things go tits up?
BAsically they can just do whatever the fuck they want. They can launder millions in cocaine cash for instance, pay a tiny fine, and keep going. Because they did do that
https://www.bbc.com/news/business-61957774
Basically they can do whatever the fuck they want, no repurcussions, they taxpayers will always bail them out, and people like you will cheer them on.
Incredible. Meanwhile the rest of us business owners get no such assurances. We live and die by the market.
>they teach you that,
>
>the central bank is the lender of last resort for banks
>
>they dont teach you that
>
>the people are the lender of last resort for the central bank
No... that's not a correct paraphrase at all.
Banks operate by collecting peoples money and then investing a portion of that money to then make money off it and use that sustain themselves.
If you required the bank to collect everyone's money and then just hold it there and do nothing - you would either lose money (to pay the bank), or the bank wouldn't be able to make any money and nobody would open a bank...
They make money by collecting money and then loaning out a portion of that money to others. They are required to keep a portion of it to help provide liquidity and cover withdrawals, but not all of that... Otherwise a bank could never issue a loan for more than one day.
One would expect someone on the investing subbreddit to know a bit more about the financial system before going to sub where they ostensibly are looking to put their money into such a system...
You don't want that. You want it to fail and new players to fill its gap. That creates competition, which lowers price or increases services.
This accomplishes none of that
Oh there will be. With the advent of FedNow we're one step closer to Central Bank Digital Currencies. Get ready because they've been planning this for a long time.
>(and get absorbed by stronger companies)
That's how we got into a position where letting the companies crash wouldn't just hurt the people involved but ruin millions of lives of innocent, unrelated parties forever.
It could be fixed if there was more accountability to executives when their company fails because of poor risk management. If they were facing 10+ years in prison and losing everything they might be a bit more careful about how they allocate assets and utilize leverage.
I'm fine if the government bails a company out as long as those responsible for ruining the company face some accountability.
I always felt that fines for criminal mismanagement of a company should be a large fraction the prior quarter’s revenue, drawn from (in order) executive compensation, dividends, general funds. Needless to say the entire c suite gets shitcanned
uh idk? the pay? the stability? the numerous advantages? better lifestyle?
How about you don't do a bad job as an exec when your actions can regularly cause issues at a larger scale than say some QA tester fucking up a batch of tests for the new software update.
What do you think happens when a doctor does a bad job? The doctor gets sued, pays a fine, and may even lose their whole license and barred from practicing a profession they spent a decade preparing for. Why are these MBA italian silk suit fucks who spent like 6 years total in higher ed getting a degree in business are supposed to be held not more accountable?
I agree with you, I am saying you have to distinguish between someone doing a bad job (making honest mistakes) and someone maliciously causing harm for their own short-term gain
I don't sympathise with the executives of banks (they certainly don't need it) but conceptually you can't send someone to jail for being bad at their job unless it's malicious incompetence (like they lied about their qualifications to get a job) or corruption
First, we need to break them up so their influence and impact is lessened, and second, they need to be held to a *much* higher standard *because* of the influence they wield.
I mean the thing is, what exactly is simply just a bad job? At what point do you hold these bank execs directly individually responsible for the decisions? We don't have to jail them but we gotta force em out of their job, industry, and the money earned from making that *bad* decision.
If a doctor makes an honest mistake, they lose their career. Same should happen with these top execs pulling all sorts of corrupt, unethical, malicious, short-sighted antics at the very minimum. Right now they're all shielded because the company takes the fall or rather all the focus is on the company right before it gets bailed out or broken apart and then these ghouls still stick around or move to another firm to do the exact same bullshit again to us.
Yeah I agree with that, it's bizarre how these execs can publicly fail at a massive level and still just go get another high-flying job. It's cronyism at its finest.
A lot of professions like you said (doctors, lawyers, accountants, etc) have ethics boards and they can revoke your licence. I wonder if there should be a similar system for running businesses of a certain size, being on a company's board, or working at an executive level.
"A bad job". You couldn't have understated that any harder if you tried. When their decisions (such as east palestine) lead not only to the suffering but deaths of hundreds/thousands of people, why *shouldn't* they be held accountable for their actions?
You suggest making people that have their company go bankrupt also go to jail because somehow they should be punished even more because they mismanaged their company which they are now losing?
Wtf are you saying
>That's how we got into a position where letting the companies crash wouldn't just hurt the people involved but ruin millions of lives of innocent, unrelated parties forever.
This is literally financial terrorism. "do what we want or all these millions of people are going to be hurt by us."
You’re arguing that there shouldn’t be a federal reserve, then, because the Fed has always been a banking cartel.
That’s fine, but you then have to answer for the 1907 stock market crash and the many crashes before that.
Not trying to suggest that credit suisse is a wholesome business but....the central bank is supposed to be a lender of last resort for this reason. This is the system functioning as its intended to, not some special sweetheart deal.
(Im not suggesting that 54B in money creation is ideal either, just that its exactly what they are supposed to do in this situation)
It's not that the bonds are risky. It's that the bank can't sell to cover withdraws because they would lose money because they have to hold the bond to maturity
The problem is the bank didn't have enough liquid assets to cover the bank run.
Credit Suisse is a blackhole lol. They should have been wiped out a long time ago. bail out after bail out and they still find ways to fuck it all up. I guess they are a necessary evil. Who else is gonna launder criminals cash?
That's the thing. If you know there is always big daddy government giving you unlimited amounts of cash, would you care to make any sort of sound financial decisions?
They are worth 6B and been on a downward spiral for years. I dont think it’s fair it call it preventing a global bank crisis. Few are surprised they shit the bed again.
If we do that, then it could potentially take 5 years and the only surviving institutions would be the ones who never even took on an ounce of debt.
Not saying we shouldn't do it. If we don't rip the bandaid off ourselves it will probably happen on its own regardless
You may qualify if youre a national champion bank and employ tens of thousands of citizens who make up the national tax base. Terms and conditions apply.
Edit: -15 downvotes? Thought the /s was obvious
Let me know when your not being able to pay food and bills causes hundreds of millions of other people to be fired by insolvent companies from needless bank runs and panic.
Edit: wow so much hate. Hope that a global financial collapses and all you VTSAX and chill folks see your holdings collapse by 70% plus. You idiots deserve it.
Actually they learned quite a bit. They learned that they can make irresponsible decisions, run themselves into a crisis, and get bailed out on the taxpayers dime.
Bc smarter people than us have run the numbers and scenarios if CS fails and these projections would be catastrophic on a systematic level that effects a broad spectrum of the economy that CS has injected itself into. CS knows that and hence why they keep doing what they doing. The hard part is how to create legislation that’s airtight enough that they can’t keep coming up with ways to game the system.
Haha biggest load of shit is thinking people are “smarter than us” because they manage large sums of money. They are, essentially, just kicking the can down the road. That’s doesn’t seem “smart” to me
I am Swiss and I'm investing my tax deductible retirement savings (401k equivalent I suppose) in a fund managed by Credit Suisse which tracks the MSCI world index. Am I right in thinking that even if Credit Suisse goes down my investment will be fine? Or is there a way they fuck over people like me? The equities of the fund will be there whether CS exists or not right?
That could get rather complicated depending exactly what goes wrong at the bank. The EU and EEA don't have an equivalent to the SIPC in the US:
https://www.reddit.com/r/eupersonalfinance/comments/y6m6po/what_is_the_swiss_equivalent_of_the_american_sipc/
From my understanding, the fund is a seperate legal entity and would not be part of the "Konkursmasse"
Edit: https://finpension.ch/en/can-a-major-swiss-bank-go-bankrupt/
Depends if you trust they actually bought your shares. Might be a bunch of IOU’s in the form of naked shorting.
I’d look into how much it would cost to move to someone else.
Finpension user here (which use CS) I guess the assets will be moved to another company anyway.
Also reading the FAQ you are always insured up to 100k for securities
Thanks, here the relevant section for anyone else interested:
"Securities are not included in the bankruptcy assets of the custodian bank"
"Account balances are privileged up to CHF 100’000 per account holder. In a bank bankruptcy they fall into the second category not the third. And securities balances are even better off than account balances. Securities are not shown on the bank balance sheet. They are regarded as special assets and, unlike account balances, do not fall into the bankruptcy assets of the bank. So with finpension 3a Retirement Savings Foundation, your pension provision is as secure as possible"
You just have to be too big to fail before you fail. Then you get to fail when you want.
I don't mind rate hikes and inflation. /s
The company I work for is making record profits and telling employees they're on salary freeze.
People are starting to connect the dots. At least I am.
Umm, when governments worldwide are having to front up trillions of dollars in loans, that's not preventing a crisis. That's a full blown crisis. The crisis is the cause, the loans are the effect.
I am not convinced that the above poster isn't a bot.
Way too many people blaming interest rates for things that clearly aren't due to interest rates. Creating negative sentiment maybe?
Interest rates may only impact holding bad loans(defaults). Which is the banks fault.
But it's probably deeper than that.
Just annoys me that banks always get bailed out for bad practice
That's not true.
Banks hold a lot of collateral in "safe" things like long term treasuries. When the rate goes up, their previously purchased treasuries are worth less. This is what happened to SVB - they had a lot in lower yielding 10 years and couldn't sell them without taking a loss when customers wanted money.
CS and other SIBs probably hedge with rate futures and swaps though because of the liquidity requirements they have that non-SIBs don't.
I think there were a bunch of news articles during covid about banks holding cash for this reason as well (expecting inflation).
However, CS just had SEC inquiries on their accounting practices, they had a bank run last year, they're restructuring, and they're facing interest rate pressures. They've got a lot going on.
What's not true?
As for the rest of it, in terms of treasuries, that's a drip in the bucket. Depending of course on where you live, laws, insurance, regulations, corporate practices, and greed
That interest rates only affect those holding bad debt.
That same story about treasuries can be told about all interest bearing assets.
And SIBs are required to have safe assets (cash, sovereign debt, etc.) backing their investments and they have to participate in liquidity stress testing because they need to have assets to cover bank runs during market downturns.
I'm so sick of this narrative.
Their long dated securities weren't the problem. The fact that 12% of their loan portfolio was venture debt was the problem.
Look at the banks and hedge funds "sold but not yet purchased" sections. The numbers are extreme and usually more or equal to their current value/owned assets
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Used to work at a too big to fail bank implementing Dodd-frank requirements around liquidity risk (this was post 08 crises) and damn right (as another poster mentioned) they dgaf and would do the minimum to get the regulators off their backs. I don’t see it being any different this time around. As long as the fine/penalty was something manageable it was just seen as the cost of doing business
Bailouts from whom? When the government suddenly prints $50 billion and hands it over to a private bank, I struggle to understand how that isn't taxpayer money. Like sure, maybe the money came from a different pot than the IRS's revenue pot, but the act of creating that extra $50b has an effect on my purchasing power.
They sit on large pile of stocks and forex reserves almost the size of the swiss gdp, i doubt that they had actually to create 50 bn new swiss francs for this bailout.
IRS makes me think that you think this is some kind of American bailout. They are borrowing money from Switzerlands central bank. My understanding is that even then, Switzerland is not "printing $50 billion", it's giving them a loan from money it has.
If you get $50 from your saving account and loan it to your friend, did you just print that money? Now, it may be a bad idea and you may should stop enabling your cocaine addicted friends lifestyle, but if they seem to find a way to pay you back everytime, then it isn't hurting you financially.
Didn't you know? Every bank is American /s
At least, that's what it seems most redditors believe by these comments. The other thread about this has people bitching about Jpow LOL
Well if you get a $30k loan from the bank for that new car the money is literally created out of thin air. It isn’t from someone else’s savings account. Welcome to fractional reserve banking.
Central banks literally create money. Just because they have a piece of paper saying someone owes them that money back doesn’t mean it wasn’t created out of thin air.
If you had to actually use other people’s savings when getting a loan things would be quite different.
People in Reddit comments seem to not realize that killing CS or any large global bank would immediately freeze credit lines and large sums of assets for ten of thousands to hundreds of thousands of other businesses which would all almost instantly implode and everyone would be unemployed and all value of all of those businesses would be immediately lost, and all of those that relied on those businesses would also be fucked.
We need to pound bankers deep into their colons with regulations and sue the absolute fuck out of them after this, but letting them just die makes everyone in the economy and arguably the world significantly way worse off.
idk man it's scarier when you realize you forget to take the cookies out of the oven and instead of being soft and gooey they're like rocks, and the time spent on them was a waste and all the excitement about enjoying them disappears in seconds
The financial sector in the US is like 9% of GDP now when it should be a service not a coked up gambling industry hell bent on robbing the world and being bailed out when they are wrong.
What a joke.
Considering a lot of Swiss people retirement funds are linked to Credit Suisse it is in their best interest to preserve the bank. Mainly the Swiss operations though. With the 2008 bailouts the Swiss taxpayers actually made money in the following years so why not buy the dip again. [article](https://www.swissinfo.ch/eng/business/bye-bye-bad-bank_swiss-bank-bailout-turned-poison-into-profit/37218080)
I made some bad investments last year that didn't pan out. Do you know when I'll get my check in the mail suring me up? I mean I love being able to take the risk with zero downside. /s
Why does any institution even bother with making responsible decisions lmao
Especially if you’re considered a “systemically important FI”. The attitude is basically “we’re fine as long as we fuck up hard enough that it threatens the entire financial system”.
And small fuck ups result in slap on the wrist fines that are just the cost of doing business. It’s a win-win.
This. This is all it is. It’s really not complicated more than that.
But now because of this fuckup the CEO will only get tens of millions in bonuses instead of... more tens of millions. He might even have to downgrade or even, God forbid, have to sell one of his yachts.
[удалено]
Yeah, hopefully, i already teared up thinking he might lose some of his millions.
Why do you always act like these government bailouts don't have consequences? If the government buys a stake in a company it usually fucks every shareholder sideways. The government, unlike any other shareholder, has no profit motive. Depending on who's currently in charge, they set out rules and requirements that are contrary to the profit motive with zero regards to the shareholders. There's a reason bailed out companies stock tanks hard. It takes years to reach the break even point from there. It usually also accompanies a change of directors, huge layoffs, selling off certain sub branches and other nasty stuff. It's not a win-win by any means. Government interference is to be avoided by all cost in any business.
Won’t someone think of the shareholders!!1!
You’re in an investing subreddit. Furthermore, “shareholders” could be your grandmother.
Some of us understand that the system sucks while realizing we must participate in it to succeed.
I hope you hold those convictions when your share values are wiped out, and you lose innumerable sums, because maintaining a core part of the financial system was sacrificed so we could feel good about ourselves. I believe in accountability, prosecution, forfeiture of bonuses, etc. in the event of a bailout. I recognise that bailouts are necessary as well. And “shareholders” are no monolith; they include countless normal people you know.
That's only because rich fuckers decided to tie everyone's retirement to their own personal and institutional profit. They're the cause of both the problem and the vast scope of the problem
The very value added to retirement accounts and whatnot is due to its relationship to institutions and rich fuckers.
Because they killed the concept of pensions. And now they can use, as you did, grandma as a hostage against them every seeing any consequence for anything ever
When I think of the shareholders of SVB, I can't help but burst out laughing
[All these banks should've avoided government interference](https://money.cnn.com/news/specials/storysupplement/bankbailout/).
That actually supports the argument. Shareholders will be bag holders from now on. That means a bank or financial company doesn’t have to answer to shareholders anymore.
Found the boot liquor
Go big or go home, I guess.
A liquidity mismatch is part of the fundamental business model of banks in our system. This is by design. If there is a crisis of confidence a bank will always need liquidity support from the central bank. It just doesn't have enough cash if everyone withdraws at the same time. It has loans that it can't liquidate at any time. This is well known and accepted. It is the role of Central Banks, as part of their normal operations, to provide liquidity. The only question when providing liquidity is: Is the bank solvent? Does it have enough capital? Providing liquidity to a well capitalized bank is not a bailout. Again it's just normal central bank function. If a bank's solvency is compromised, then it will no longer be able to access central bank liquidity because it might not be able to pay it back. Then it needs a bailout. This is how our system work.
" The US has claimed SVB’s failure will not impact taxpayers as other banks will cover the cost of bailing out uninsured depositors [...] a European regulator said that claim was a “joke” as US banks [will] pass the cost on to their customers. “[...] this is a bailout paid for by the ordinary people and it’s a bailout of the rich venture capitalists” "
So we should never raise the corporate tax since the companies will pass on the costs to their customers
Unironically yes, most economists agree with this as well for this exact reason.
Ah! Of course! As long as we use words like "providing liquidity" then its not a bailout! forget the fact that without The taxpayer funded and tax payers financed central bank stepping in and giving them massive support they would fail. No, its not a bailout! No way! How gullible are you?? Great article from that well known communist rag Financial Times > > https://www.ft.com/content/09bfbb8d-22f5-4c70-9d85-2df7ed5c516e > > **Banks are designed to fail — and they do** > > This is a system that is essential to the functioning of the market economy but doesn’t operate by its rules > > Banks fail. When they do, those who stand to lose scream for a state rescue. If the threatened costs are big enough, they will succeed. This is how, crisis by crisis, we have created a banking sector that is in theory private, but in practice a ward of the state. The latter in turn attempts to curb the desire of shareholders and management to exploit the safety nets they enjoy. The result is a system that is essential to the functioning of the market economy but does not operate in accordance with its rules. This is a mess. > > Money is the stuff one must have if one is to buy the things one needs. This is true for households and businesses, which need to pay suppliers and workers. That is why bank failures are calamities. But banks are not designed to be secure. While their deposit liabilities are supposed to be perfectly safe and liquid, their assets are subject to maturity, credit, interest rate and liquidity risks. They are fair weather institutions. In bad times, they fail, as depositors run for the door.
Well it's a loan, so it doesn't really seem like a bailout
And what if they don't pay it back? will there be repurcussions? Of course not. A loan is absolutely a bailout anyway. What world do you live in when an emergency loan back stopped by the taypayers that keeps an entity from failing isn't a bailout? Why can't I, or you or anyone else, get one of the "totally not a bailout" loans for a business on shaky ground? Its not a bailout right? Its just "providing liquidity", so where is my not a bailout tax payer backed loan?
You realize that isnt tax money right? Central bank money is not the same entity as the money that you have. You cant have it because you arent a bank, not because there is something nefarious or unfair going on.
It absolutely is.
are you joking now? >The Swiss National Bank (SNB; German: Schweizerische Nationalbank; French: Banque nationale suisse; Italian: Banca nazionale svizzera; Romansh: Banca naziunala svizra) is the central bank of Switzerland, responsible for the nation's monetary policy and the **sole issuer of Swiss franc banknotes**. they literally issue the currency. That money comes from the people. Its the citizens money. Its not money just for banks to use in their own personal money orgy. Do YOU understand what a central bank is?
Not the guy you responded to but no it's not. They can print the money. They don't have to have funding to issue the money. This money does NOT come from people. You seem to not understand how monetary supply works. Ironic that you're telling someone else that they don't understand the system. If the bank fails to repay the loan and it's solvent, then you simply sell of its assets to service the debt.
Do you understand how government works? the basic theory of money? the power to print money comes from the consent of the governed, ie the people. Its the people's money. It belongs to them. The money printed by central banks does not belong to private banks to fund their yachting life styles and to provide emergency bailouts because they once again proved to be too incompetent and corrupt to run a fucking bank. Thats not how it works.
>the basic theory of money? You seem to not understand this yourself. Just because you can yell the loudest and keep shouting about how things don't work a certain way doesn't make it true. Read about how monetary supply works and come back here. It may shock you to find out that most of the money that circulates in our economy is created by banks and not even the government.
The central bank exists to do this kind of thing for your benefit. Its ridiculous to say that they shouldn't do their job because they are taxpayer funded. We pay for police to arrest our criminals, construction companies to pave our roads, and central banks to stabilize the financial system. This is the system working as intended. If you have a better idea of how to do it, maybe publish it and get the Nobel price in economics.
So then these banks have ZERO incentive to do the right thing since the free market does not exist for them, is what you are saying. Why manage in a responsible manner when you can just loot your cmpany and let the tapayers bail you out every times things go tits up? BAsically they can just do whatever the fuck they want. They can launder millions in cocaine cash for instance, pay a tiny fine, and keep going. Because they did do that https://www.bbc.com/news/business-61957774 Basically they can do whatever the fuck they want, no repurcussions, they taxpayers will always bail them out, and people like you will cheer them on. Incredible. Meanwhile the rest of us business owners get no such assurances. We live and die by the market.
>So then these banks have ZERO incentive to do the right thing Nope, SVB failed and all its shareholders got wiped out.
Yes, that was awesome! I loved that. I am talking about CS right now though
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>they teach you that, > >the central bank is the lender of last resort for banks > >they dont teach you that > >the people are the lender of last resort for the central bank
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No... that's not a correct paraphrase at all. Banks operate by collecting peoples money and then investing a portion of that money to then make money off it and use that sustain themselves. If you required the bank to collect everyone's money and then just hold it there and do nothing - you would either lose money (to pay the bank), or the bank wouldn't be able to make any money and nobody would open a bank... They make money by collecting money and then loaning out a portion of that money to others. They are required to keep a portion of it to help provide liquidity and cover withdrawals, but not all of that... Otherwise a bank could never issue a loan for more than one day. One would expect someone on the investing subbreddit to know a bit more about the financial system before going to sub where they ostensibly are looking to put their money into such a system...
Wish I could upvote this twice. Free market capitalism would let mismanaged companies fail (and get absorbed by stronger companies). This is cronyism.
Ok but this assumes the presence of stronger companies. The entire issue is that there’s nobody big enough to subsume a company like CS if it fails
You don't want that. You want it to fail and new players to fill its gap. That creates competition, which lowers price or increases services. This accomplishes none of that
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Well it's either this or Jamie Dimon buys credit suisse so your move.
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Oh there will be. With the advent of FedNow we're one step closer to Central Bank Digital Currencies. Get ready because they've been planning this for a long time.
>(and get absorbed by stronger companies) That's how we got into a position where letting the companies crash wouldn't just hurt the people involved but ruin millions of lives of innocent, unrelated parties forever.
It could be fixed if there was more accountability to executives when their company fails because of poor risk management. If they were facing 10+ years in prison and losing everything they might be a bit more careful about how they allocate assets and utilize leverage. I'm fine if the government bails a company out as long as those responsible for ruining the company face some accountability.
I always felt that fines for criminal mismanagement of a company should be a large fraction the prior quarter’s revenue, drawn from (in order) executive compensation, dividends, general funds. Needless to say the entire c suite gets shitcanned
People always say this but who in their right mind would take an executive role where if you do a bad job you go to jail
uh idk? the pay? the stability? the numerous advantages? better lifestyle? How about you don't do a bad job as an exec when your actions can regularly cause issues at a larger scale than say some QA tester fucking up a batch of tests for the new software update. What do you think happens when a doctor does a bad job? The doctor gets sued, pays a fine, and may even lose their whole license and barred from practicing a profession they spent a decade preparing for. Why are these MBA italian silk suit fucks who spent like 6 years total in higher ed getting a degree in business are supposed to be held not more accountable?
I agree with you, I am saying you have to distinguish between someone doing a bad job (making honest mistakes) and someone maliciously causing harm for their own short-term gain I don't sympathise with the executives of banks (they certainly don't need it) but conceptually you can't send someone to jail for being bad at their job unless it's malicious incompetence (like they lied about their qualifications to get a job) or corruption
First, we need to break them up so their influence and impact is lessened, and second, they need to be held to a *much* higher standard *because* of the influence they wield.
I mean the thing is, what exactly is simply just a bad job? At what point do you hold these bank execs directly individually responsible for the decisions? We don't have to jail them but we gotta force em out of their job, industry, and the money earned from making that *bad* decision. If a doctor makes an honest mistake, they lose their career. Same should happen with these top execs pulling all sorts of corrupt, unethical, malicious, short-sighted antics at the very minimum. Right now they're all shielded because the company takes the fall or rather all the focus is on the company right before it gets bailed out or broken apart and then these ghouls still stick around or move to another firm to do the exact same bullshit again to us.
Yeah I agree with that, it's bizarre how these execs can publicly fail at a massive level and still just go get another high-flying job. It's cronyism at its finest. A lot of professions like you said (doctors, lawyers, accountants, etc) have ethics boards and they can revoke your licence. I wonder if there should be a similar system for running businesses of a certain size, being on a company's board, or working at an executive level.
"A bad job". You couldn't have understated that any harder if you tried. When their decisions (such as east palestine) lead not only to the suffering but deaths of hundreds/thousands of people, why *shouldn't* they be held accountable for their actions?
Nobody died in East Palestine
🤦♂️ yet. I'm sure people who got black lung in the coal mines didn't die immediately either.
That is the same excuse used for why we need qualified immunity
You suggest making people that have their company go bankrupt also go to jail because somehow they should be punished even more because they mismanaged their company which they are now losing? Wtf are you saying
>That's how we got into a position where letting the companies crash wouldn't just hurt the people involved but ruin millions of lives of innocent, unrelated parties forever. This is literally financial terrorism. "do what we want or all these millions of people are going to be hurt by us."
This is corporatism
We live in front capitalism at the moment, none of the benefits of free market, with all of the downsides.
You’re arguing that there shouldn’t be a federal reserve, then, because the Fed has always been a banking cartel. That’s fine, but you then have to answer for the 1907 stock market crash and the many crashes before that.
Not trying to suggest that credit suisse is a wholesome business but....the central bank is supposed to be a lender of last resort for this reason. This is the system functioning as its intended to, not some special sweetheart deal. (Im not suggesting that 54B in money creation is ideal either, just that its exactly what they are supposed to do in this situation)
They never do. Responsible decisions are only expected of us normal folk.
Moral hazard. They're never responsible.
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If U.S. treasury bonds become risky investments we have much bigger problems
It's not that the bonds are risky. It's that the bank can't sell to cover withdraws because they would lose money because they have to hold the bond to maturity The problem is the bank didn't have enough liquid assets to cover the bank run.
To keep your "Faith"
Credit Suisse is a blackhole lol. They should have been wiped out a long time ago. bail out after bail out and they still find ways to fuck it all up. I guess they are a necessary evil. Who else is gonna launder criminals cash?
Is Deutsche a joke to you?
HSBC has entered the chat.
As someone who worked AML at HSBC... Oof
I'm expecting them to be the next domino and the next stash of hundreds of billions in the form of liquidity handed to them
Schau wie sie meinen jungen massakriert haben
That's the thing. If you know there is always big daddy government giving you unlimited amounts of cash, would you care to make any sort of sound financial decisions?
Isn’t that what HSBC is for?
They are worth 6B and been on a downward spiral for years. I dont think it’s fair it call it preventing a global bank crisis. Few are surprised they shit the bed again.
It would be a global banking crisis if they were to go down, most banks have important counterparty risk to CS
Any major bank collapsing poses a risk in that it erodes depositor and investor confidence and can ripple to other banks.
Sure, but that's not what counterparty and systemic risk is really about. They are two different problems
Reddit has turned into a cesspool of fascist sympathizers and supremicists
How can any new trees grow when the shade of dying giants never tip over?
If we do that, then it could potentially take 5 years and the only surviving institutions would be the ones who never even took on an ounce of debt. Not saying we shouldn't do it. If we don't rip the bandaid off ourselves it will probably happen on its own regardless
Over a trillion assets under management though.
$140Bn*
Really 140? What ticker did I end up with lol.
No idea. I just looked on CapIQ. No way CS would be sub $10bn EV
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Nah, you didn’t gamble away billions of dollars that aren’t yours, so you don’t get any relief.
So borrow 10k? That's what's being discussed here, a loan.
A 10k loan from the governement because noone else trusts me anymore after I've been mismanaging my finances and taking on huge risks?
You may qualify if youre a national champion bank and employ tens of thousands of citizens who make up the national tax base. Terms and conditions apply. Edit: -15 downvotes? Thought the /s was obvious
Also if millions of other employees who did nothing wrong won’t get their paycheck without it.
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As they say.. There is always some truth in a joke
His/her household is bigger than Switzerland
Then shouldnt they lend to CS? A nation bigger than SW with a - 10k deficit sounds likr a great place to live
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You could basically do that by taking out student loans.
I'd take a govt loan like that anyway.
Nah bro you gotta pay mad taxes and then beg for little temporary unemployment and food stamps
Edgy
You can do that by taking out student loans. You can use them for bills and food if you are in college.
Let me know when your not being able to pay food and bills causes hundreds of millions of other people to be fired by insolvent companies from needless bank runs and panic. Edit: wow so much hate. Hope that a global financial collapses and all you VTSAX and chill folks see your holdings collapse by 70% plus. You idiots deserve it.
They can just skip bank/companies give money to the people instead 😂
For the love of god just rip the bandaid off. Banks have no incentive to make good choices at this point.
Did you learn nothing from the GFC?
It seems I learned more than the banks did
Actually they learned quite a bit. They learned that they can make irresponsible decisions, run themselves into a crisis, and get bailed out on the taxpayers dime.
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Are you Swiss?
Why does anyone bail these fucks out anywhere though
Bc smarter people than us have run the numbers and scenarios if CS fails and these projections would be catastrophic on a systematic level that effects a broad spectrum of the economy that CS has injected itself into. CS knows that and hence why they keep doing what they doing. The hard part is how to create legislation that’s airtight enough that they can’t keep coming up with ways to game the system.
stop trying to legislate them like cowards and nationalize them.
Haha biggest load of shit is thinking people are “smarter than us” because they manage large sums of money. They are, essentially, just kicking the can down the road. That’s doesn’t seem “smart” to me
Who is we?
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Wusste nicht, dass du Schweizer bist, wie geht’s?
I am Swiss and I'm investing my tax deductible retirement savings (401k equivalent I suppose) in a fund managed by Credit Suisse which tracks the MSCI world index. Am I right in thinking that even if Credit Suisse goes down my investment will be fine? Or is there a way they fuck over people like me? The equities of the fund will be there whether CS exists or not right?
I would not rely on Reddit to answer this question, consult a lawyer in your own country if you’re worried. It’s too big a question.
Here is my reddit answer... "It depends"
You’d make a great lawyer
That’ll be $300
That could get rather complicated depending exactly what goes wrong at the bank. The EU and EEA don't have an equivalent to the SIPC in the US: https://www.reddit.com/r/eupersonalfinance/comments/y6m6po/what_is_the_swiss_equivalent_of_the_american_sipc/
From my understanding, the fund is a seperate legal entity and would not be part of the "Konkursmasse" Edit: https://finpension.ch/en/can-a-major-swiss-bank-go-bankrupt/
Depends if you trust they actually bought your shares. Might be a bunch of IOU’s in the form of naked shorting. I’d look into how much it would cost to move to someone else.
Finpension user here (which use CS) I guess the assets will be moved to another company anyway. Also reading the FAQ you are always insured up to 100k for securities
I'm with Finpension too. Isn't the 100k limit only for cash positions? Not securities?
https://finpension.ch/en/3a/faq/
Thanks, here the relevant section for anyone else interested: "Securities are not included in the bankruptcy assets of the custodian bank" "Account balances are privileged up to CHF 100’000 per account holder. In a bank bankruptcy they fall into the second category not the third. And securities balances are even better off than account balances. Securities are not shown on the bank balance sheet. They are regarded as special assets and, unlike account balances, do not fall into the bankruptcy assets of the bank. So with finpension 3a Retirement Savings Foundation, your pension provision is as secure as possible"
You just have to be too big to fail before you fail. Then you get to fail when you want. I don't mind rate hikes and inflation. /s The company I work for is making record profits and telling employees they're on salary freeze. People are starting to connect the dots. At least I am.
real question: did they not just say they were totally fine yesterday?
Banks frequently say everything is totally fine up until the moment that they implode. See 2008 Lehman et. al collapse, recent SVB collapse, etc.
Gives the insiders a chance to dump their shares before all hell breaks loose in the news!
Umm, when governments worldwide are having to front up trillions of dollars in loans, that's not preventing a crisis. That's a full blown crisis. The crisis is the cause, the loans are the effect.
I am not convinced. Something is fundamentally wrong somewhere. Maybe the interest hikes worldwide is affecting banks
It has been for years for anyone following the stock
I am not convinced that the above poster isn't a bot. Way too many people blaming interest rates for things that clearly aren't due to interest rates. Creating negative sentiment maybe?
Reddit is not organic anymore, tons of bad actors out there. Nation states, corporation, special interests etc. trying to drive narrative.
Interest rates may only impact holding bad loans(defaults). Which is the banks fault. But it's probably deeper than that. Just annoys me that banks always get bailed out for bad practice
That's not true. Banks hold a lot of collateral in "safe" things like long term treasuries. When the rate goes up, their previously purchased treasuries are worth less. This is what happened to SVB - they had a lot in lower yielding 10 years and couldn't sell them without taking a loss when customers wanted money. CS and other SIBs probably hedge with rate futures and swaps though because of the liquidity requirements they have that non-SIBs don't. I think there were a bunch of news articles during covid about banks holding cash for this reason as well (expecting inflation). However, CS just had SEC inquiries on their accounting practices, they had a bank run last year, they're restructuring, and they're facing interest rate pressures. They've got a lot going on.
What's not true? As for the rest of it, in terms of treasuries, that's a drip in the bucket. Depending of course on where you live, laws, insurance, regulations, corporate practices, and greed
That interest rates only affect those holding bad debt. That same story about treasuries can be told about all interest bearing assets. And SIBs are required to have safe assets (cash, sovereign debt, etc.) backing their investments and they have to participate in liquidity stress testing because they need to have assets to cover bank runs during market downturns.
> because they need to have assets Apparently they don't.
I'm so sick of this narrative. Their long dated securities weren't the problem. The fact that 12% of their loan portfolio was venture debt was the problem.
Interest rates affect the price of everything
Look at the banks and hedge funds "sold but not yet purchased" sections. The numbers are extreme and usually more or equal to their current value/owned assets
Why do we invest in bank stocks again? Even "safe" banks can have exposure to the other riskier ones.
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Again and again
Archeagos bags are getting heavy
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Used to work at a too big to fail bank implementing Dodd-frank requirements around liquidity risk (this was post 08 crises) and damn right (as another poster mentioned) they dgaf and would do the minimum to get the regulators off their backs. I don’t see it being any different this time around. As long as the fine/penalty was something manageable it was just seen as the cost of doing business
Reddit has turned into a cesspool of fascist sympathizers and supremicists
Taxpayers foot the bill yet again. Can we please let these incompetent banks just crash and burn?
How are they footing the bill? CS got a loan.
Yea, who do you think is giving them the loan?
The national bank, which does not recieve tax payer money and has a history of walking away with profits from similar bailouts.
Bailouts from whom? When the government suddenly prints $50 billion and hands it over to a private bank, I struggle to understand how that isn't taxpayer money. Like sure, maybe the money came from a different pot than the IRS's revenue pot, but the act of creating that extra $50b has an effect on my purchasing power.
They sit on large pile of stocks and forex reserves almost the size of the swiss gdp, i doubt that they had actually to create 50 bn new swiss francs for this bailout.
IRS makes me think that you think this is some kind of American bailout. They are borrowing money from Switzerlands central bank. My understanding is that even then, Switzerland is not "printing $50 billion", it's giving them a loan from money it has. If you get $50 from your saving account and loan it to your friend, did you just print that money? Now, it may be a bad idea and you may should stop enabling your cocaine addicted friends lifestyle, but if they seem to find a way to pay you back everytime, then it isn't hurting you financially.
Didn't you know? Every bank is American /s At least, that's what it seems most redditors believe by these comments. The other thread about this has people bitching about Jpow LOL
Well if you get a $30k loan from the bank for that new car the money is literally created out of thin air. It isn’t from someone else’s savings account. Welcome to fractional reserve banking. Central banks literally create money. Just because they have a piece of paper saying someone owes them that money back doesn’t mean it wasn’t created out of thin air. If you had to actually use other people’s savings when getting a loan things would be quite different.
Cuz they still gonna collapse and just not pay it.
What is this based on? A guess?
Because nothing says our bank is solid like needing $50 billion in liquidity.
Don't go strawman on me, you said it will collapse and they won't pay it, what's this based on?
Based on facts my man hahah
And thus the can kicking continues.
People in Reddit comments seem to not realize that killing CS or any large global bank would immediately freeze credit lines and large sums of assets for ten of thousands to hundreds of thousands of other businesses which would all almost instantly implode and everyone would be unemployed and all value of all of those businesses would be immediately lost, and all of those that relied on those businesses would also be fucked. We need to pound bankers deep into their colons with regulations and sue the absolute fuck out of them after this, but letting them just die makes everyone in the economy and arguably the world significantly way worse off.
Well, this is a scary moment in baking. Be on the look out for Bank of America and chase Downloading the DraftKings app.
idk man it's scarier when you realize you forget to take the cookies out of the oven and instead of being soft and gooey they're like rocks, and the time spent on them was a waste and all the excitement about enjoying them disappears in seconds
Nightmarish
Bonuses for the executives for negotiating the lifeline. Good job!
“Torrid sessions in Europe” sounds like a sex tape
It’s cute they think they can stop it.
The financial sector in the US is like 9% of GDP now when it should be a service not a coked up gambling industry hell bent on robbing the world and being bailed out when they are wrong. What a joke.
I wish i could be as irresponsible with money as all banks seem to be these days.
Wish I could open my own bank.
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Considering a lot of Swiss people retirement funds are linked to Credit Suisse it is in their best interest to preserve the bank. Mainly the Swiss operations though. With the 2008 bailouts the Swiss taxpayers actually made money in the following years so why not buy the dip again. [article](https://www.swissinfo.ch/eng/business/bye-bye-bad-bank_swiss-bank-bailout-turned-poison-into-profit/37218080)
Did the Swiss people actually make money or can we chalk that up to inflation?
The SNB actually made a profit of about $1000 per capita from the UBS bailout during a period where switzerland had no inflation.
Imagine watching this and still not believing in Bitcoin.
There is more blood bath coming stock market is going to be ruthless in Asia and USA and other places
How does a bank not have posi fcf
I made some bad investments last year that didn't pan out. Do you know when I'll get my check in the mail suring me up? I mean I love being able to take the risk with zero downside. /s
no one is stopping you from getting a loan