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Bank runs are psychological in modern times; my next worry is that the news machine has begun to nibble on midsize banks, so that may be the next victim that ge
by Zetice 4y ago
Bank runs are psychological in modern times; my next worry is that the news machine has begun to nibble on midsize banks, so that may be the next victim that gets devoured for content.
- cm2187 4y agoThere are a few other large banks that have also their lot of challenges. At this stage, as you say, it is an irrational panic. CS was well capitalised by any modern standard and it would have required massive losses before creditors and depositors were seriously exposed. But no bank can resist a large enough bank run.
- Arnt 4y agoFWIW almost none of the $100B that flowed out was insured.
- fsckboy 4y agothat's interesting, and exactly what regulators should expect. in a certain sense, the crisis starts when the bank starts taking in large uninsured deposits
- Arnt 4y agoTo be pedantic, this was managed money, not deposited. You can go to CS and say "Here, I have a million, please buy and sell some shares for me so my children will have two million each", or "here, we sell much in the runup to Christmas but our costs are evenly spread over the year, please manage our spare cash so we'll earn something when we can".
- mschuster91 4y agoCS was gobbled up in a truckload of scandals for years now; I'd guess only Deutsche Bank surpasses them. It is not surprising at all that all the mistrust finally caught up with CS.
- dwater 4y agoAre you referring to Credit Suisse as a victim of the media and not their own constant institutional failures? Ditto Silicon Valley Bank.
- blibble 4y agoCS is not middle size, it's one of the big ones ("globally systemically important")
- psychphysic 4y agoIt was a dumpster fire of a business however. And confidence has been lacking for much longer than this recent crisis.
- EFreethought 4y agoIt depends on who winds up running CS. Officially, Boeing bought McDonnell-Douglas, but in the end the engineers at Boeing got pushed out and the bean counters at M-D were in charge and ran it to the ground. The question is will prudent people run the new UBS? Or the same sort of people who got CS in the trouble that it is in?
- psychphysic 4y agoUBS has been very clear that they intend to gut the investment banking arm and continue the universal banking arm. This should prove a cash cow for UBS so long as they ruthlessly trim CS. The final deal is a bit different from OP 3.3bn, 100bn liquidity and 8bn indemnity from losses (more than market value of CS Friday!)
- Zetice 4y ago"Midsize U.S. banks reportedly ask the FDIC to insure all deposits for two years" [0] The beast must be fed. [0] https://www.cnbc.com/2023/03/18/midsize-us-banks-reportedly-ask-the-fdic-to-insure-all-deposits-for-two-years.html https://www.cnbc.com/2023/03/18/midsize-us-banks-reportedly-...
- fsckboy 4y agoyour warning makes me think "wait till a bank and a media company start relying on the same AI for advice" - chatGPT, for the lulz of course, employees of various companies in a place like NYC socialize together after work (in NY, everybody goes out after work on the regular, who wants to go home to a teeny airshaft apartment?) so they're basically engaging in a large game of telephone about what happened each day, might have the same effect.
- nonethewiser 4y agoAnd if that’s the dynamic, you can be sure foreign interests are hard at work to exploit it.