Watch out for a depression and bank failures

[Sarge]

Reading how UBS just bought Credit Suisse for $3billion with about $100 billion in debt and liquidity guarantees from the Swiss government and central bank .

Corporate welfare at its finest.

One has to wonder how such a bailout arrangement would have been politically received here in the US, given all the public backlash back in 2008.

Our largest banks are actually much better capitalized than those in Europe, but the US regionals are in trouble.

Not sure if raising the deposit insurance limit is going to be enough to restore confidence, but it needs done anyway.

$250k just is too low, given the size of some of these "smaller" banks now.

Worst part is, UBS was FORCED to buy Credit Suisse by the Swiss government. UBS agreed to $1 Billion and then the government said, “No, you’ll pay $3 billion.” Corporate welfare indeed.

 

[Punxsutawney]

Worst part is, UBS was FORCED to buy Credit Suisse by the Swiss government. UBS agreed to $1 Billion and then the government said, “No, you’ll pay $3 billion.” Corporate welfare indeed.

UBS had no choice because Credit Suisse failing or being nationalized would have been a disaster for the global financial system and UBS was the only Swiss bank large enough to absorb Credit Suisse.

They did it as much out of self preservation as anything else.

UBS "could" have bought it for $1 billion, but there would have been far less guarantees from the Swiss government if the acquisition of Credit Suisse started to put UBS at risk.

There was essentially a negotiation going on.

 

[Confluence]

UBS had no choice because Credit Suisse failing or being nationalized would have been a disaster for the global financial system and UBS was the only Swiss bank large enough to absorb Credit Suisse.

They did it as much out of self preservation as anything else.

UBS "could" have bought it for $1 billion, but there would have been far less guarantees from the Swiss government if the acquisition of Credit Suisse started to put UBS at risk.

There was essentially a negotiation going on.

Worst part is, UBS was FORCED to buy Credit Suisse by the Swiss government. UBS agreed to $1 Billion and then the government said, “No, you’ll pay $3 billion.” Corporate welfare indeed.

Haha, you didn't really get to hear the worst news yet.

Who paid for the Swiss National Bank to "loan" money to corrupt UBS to buy the more corrupt Credit Suisse?

Both banks have unrestricted access to the SNB’s existing facilities, through which they can obtain liquidity from the SNB in accordance with the ‘Guidelines on monetary policy instruments’. In addition, and based on the Federal Council’s Emergency Ordinance, Credit Suisse and UBS can obtain a liquidity assistance loan with privileged creditor status in bankruptcy for a total amount of up to CHF 100 billion. Furthermore, and based on the Federal Council’s Emergency Ordinance, the SNB can grant Credit Suisse a liquidity assistance loan of up to CHF 100 billion backed by a federal default guarantee. The structure of the loan is based on the Public Liquidity Backstop (PLB), the key parameters of which were already decided by the Federal Council in 2022. The substantial provision of liquidity will ensure that both banks have access to the necessary liquidity. By providing substantial liquidity assistance, the SNB is fulfilling its mandate to contribute to the stability of the financial system, and it continues to work closely with the federal government and FINMA to this end.

Central Bank Liquidity Swaps​

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank maintain standing U.S. dollar liquidity swap line arrangements to enhance the provision of U.S. dollar liquidity.

These facilities serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad.

U.S. Dollar Liquidity Swap

590,500,000

COUNTERPARTY	TRADE DATE	SETTLEMENT DATE	MATURITY DATE	TERM (DAYS)	INTEREST RATE (%)	AMOUNT	SMALL VALUE OPERATION1
European Central Bank	03/22/2023	03/23/2023	03/30/2023	7	5.04	473,500,000
Swiss National Bank	03/22/2023	03/23/2023	03/30/2023	7	5.04	1,000,000
European Central Bank	03/21/2023	03/22/2023	03/29/2023	7	4.99	5,000,000
Swiss National Bank	03/21/2023	03/22/2023	03/29/2023	7	4.99	5,000,000
European Central Bank	03/20/2023	03/21/2023	03/28/2023	7	4.94	5,000,000
Swiss National Bank	03/20/2023	03/21/2023	03/28/2023	7	4.94	101,000,000

Bomma and Tiny Tim set out these swap lines, at the option of the receiver, not the lender, back in 2010 POST last financial crisis. It means that the Swiss, or the Brits, or the EU or Canada or Japan can open a fire hose of billions of USD from the US Federal Reserve, without needing US approval, as we have seen this week. Maybe the Swiss will pay this back this week, and the crisis is over, right?

 

[MTC]

The rich just get richer. Craziness. This is not sustainable. Things are going to get tough.

There really needs to be term limits for the entire government from fed, state, county.

Too much money goes ???

 

[Djfan]

There really needs to be term limits for the entire government from fed, state, county.

Too much money goes ???

I guess. I would bet that the crooks can work around that, too.

 

[xjx]

Does Joe keep his illbegotten gains in a Swiss bank?

 

[Steeltime]

Haha, you didn't really get to hear the worst news yet.

Who paid for the Swiss National Bank to "loan" money to corrupt UBS to buy the more corrupt Credit Suisse?

Both banks have unrestricted access to the SNB’s existing facilities, through which they can obtain liquidity from the SNB in accordance with the ‘Guidelines on monetary policy instruments’. In addition, and based on the Federal Council’s Emergency Ordinance, Credit Suisse and UBS can obtain a liquidity assistance loan with privileged creditor status in bankruptcy for a total amount of up to CHF 100 billion. Furthermore, and based on the Federal Council’s Emergency Ordinance, the SNB can grant Credit Suisse a liquidity assistance loan of up to CHF 100 billion backed by a federal default guarantee. The structure of the loan is based on the Public Liquidity Backstop (PLB), the key parameters of which were already decided by the Federal Council in 2022. The substantial provision of liquidity will ensure that both banks have access to the necessary liquidity. By providing substantial liquidity assistance, the SNB is fulfilling its mandate to contribute to the stability of the financial system, and it continues to work closely with the federal government and FINMA to this end.

Central Bank Liquidity Swaps​

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank maintain standing U.S. dollar liquidity swap line arrangements to enhance the provision of U.S. dollar liquidity.

These facilities serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad.

U.S. Dollar Liquidity Swap

590,500,000

COUNTERPARTY	TRADE DATE	SETTLEMENT DATE	MATURITY DATE	TERM (DAYS)	INTEREST RATE (%)	AMOUNT	SMALL VALUE OPERATION1
European Central Bank	03/22/2023	03/23/2023	03/30/2023	7	5.04	473,500,000
Swiss National Bank	03/22/2023	03/23/2023	03/30/2023	7	5.04	1,000,000
European Central Bank	03/21/2023	03/22/2023	03/29/2023	7	4.99	5,000,000
Swiss National Bank	03/21/2023	03/22/2023	03/29/2023	7	4.99	5,000,000
European Central Bank	03/20/2023	03/21/2023	03/28/2023	7	4.94	5,000,000
Swiss National Bank	03/20/2023	03/21/2023	03/28/2023	7	4.94	101,000,000

Bomma and Tiny Tim set out these swap lines, at the option of the receiver, not the lender, back in 2010 POST last financial crisis. It means that the Swiss, or the Brits, or the EU or Canada or Japan can open a fire hose of billions of USD from the US Federal Reserve, without needing US approval, as we have seen this week. Maybe the Swiss will pay this back this week, and the crisis is over, right?

Wow, where can I get 5% on a 7-day bond??

 

[Confluence]

Does Joe keep his illbegotten gains in a Swiss bank?

No clue. But Bomma, Trump and Sleepy Creepy are all ok with the Fed allowing the Swiss to bail out Swiss banks using American money for an unlimited time, without prior American approval.

These facilities has been in place since 2010, presumably because the US was the cause of the 2008/9 global financial crisis (that was based on lending fraud and financial derivative manipulations that make SBF look like a middle schooler). Essentially, they fixed the debt issue with much more debt, like using cocaine to fix a heroin addiction.

What could go wrong?. The Swiss are good folks who will always find a way to support the US......right?

 

[xjx]

Soon the easter bunny will be available to guide Joe once again.

 

[Coach]

When a news source like CNBC report bad economic news, you know the situation is really worse than it appears.

 

[Ron Burgundy]

When a news source like CNBC report bad economic news, you know the situation is really worse than it appears.

If my bank goes under does that mean I can quit making payments on my truck?

 

[xjx]

Yea. Biden will cover it under the student loan debt transfer to Americans.

 

[Confluence]

If my bank goes under does that mean I can quit making payments on my truck?

Debt is fungible, so you would get a new bank.

Unless you are GM, then Bomma can just make that go away