Credit Suisse sheds nearly 25%, key backer says no more money

I was just confirming the notion that they're a very shady bank. I'm not qualified to say whether the shadyness is the primary cause of their downfall, but it doesn't seem outside the realm of possibility to me.

And sure, anyone can reduce any view down to a laughable caricature. Good job, I guess.

They need to protect their laundering clients.

HSBC is an extension of the UK laundering fraud arm of Yee Olde Kingdom.

Expect much fuckery afoot.

Of course CS is in a tax haven, and their dirty laundry generally seems much fresher and much more deliberate than negligent. E.g attempting to help cover up assets of Russian oligarchs under sanctions after the Russian invasion of Ukraine.

And the Credit Suisse leaks last year revealed just how much dirty money flows through the bank still to this day.

What?

Switzerland has always been aggressively neutral to the extent of annoying the rest of Europe, not just during WW2 but all the way back to the Hundred Years War.

If they take a side, they lose the fortunes of more than just Russians. Anyone who is controversial and has money in Switzerland will realize it’s no longer safe in the event the world exposes their bad deeds.

Being Swiss is a good reason to want a Swiss bank account. Rich foreigners might be a little suspicious?

It's somewhat similar to who really needs cryptocurrency, except you don't get the enthusiasts or small accounts, either.

Maybe look at who unmoderated "free speech" forums become popular with. Or who needs to use Tor.

* the neutrality isn't "newfound", they have it since the Vienna Congress 1814/1815

* back then the big powers of Europe feared that Switzerland will join one of their opponents, so it was dictated to Switzerland originally

* but later, when Switzerland saw how the countries surrounding them got demolished again and again in each war, they actually adopted it. It is now in their constitution, article 185.

* Switzerland is a direct democracy. The constitution cannot be changed by the government. And not even by the parliament. Only a public vote of all the electorate can change it.

* the swiss electorate is about 6 million people large

* the swiss banking sector only employs about 89'000 people

So, what can we learn from this? Your postulation is, in all likelihood, wrong. Why would normal people, like Carpenters, Farmers, Teachers, Nurses vote for neutrality to "appease certain Russians" ? They have no benefit from this.

Also, Switzerland isn't the only (current) neutral country in Europe. We have Austria, Ireland and some smaller ones, like Liechtenstein. We used to have also Portugal, Sweden or Belgium there --- is any of these current or previously neutral countries linked with money laundering? I don't think so. Therefore we can even dismiss that somehow money laundering is linked to neutrality.

If anything, then something else in the swiss law system is responsible: their banking secret laws. One can still open an anonymous "number account" at swiss banks. It's not cheap, but that is just one more reason why it attracts tax evaders and criminals.

And finally, that today Switzerland is specially linked to Oligarchs needs a proof. Why? Simply because Switzerland implemented all of the nine sanction packets of the EU. Despite not being in the EU. So Switzerland, like any other EU country, sanctions the Russian state, certain russian companies, certain russian individuals. Including some people one would classify as "Oligarch". All of them? Probably not. But then again ... this would be a problem of the EU, by not adding them to the sanction lists yet.

Given European history their options are neutrality or extream internal strife.

You are overusing your Ukraine conflict lens when viewing the world.

They probably did not give away their military gear because the price or conditions they have envisioned were not right.

Make no mistake, Switzerland is right up there in the top 5 as far corrupt government and institutions go, they just have the better suits, camouflage and clandestinity.

Sure, life is good in Switzerland for most, the system is one of the best as far median income and level of wealth goes, but that did not fall from the sky.

This country had to ration food until not too recently, and before that, Russia had to save them from Napoleon.

(but seriously, skim through the video. Switzerland's defenses are wild and beautiful.)

[0] https://www.youtube.com/watch?v=9bPIaHg11mI

Certainly a novel take for an arms dealing country.

Of course. But there's 2 big problems with that from a government's perspective.

1) Prosecuting actual criminals would require hard work: real investigation without having an automatic sneak peak into everybody's finances is hard.

2) This wouldn't give the government any extra power.

After 20 years there should be a vast body of evidence to justify the second, third, and fourth order effects these pernicious laws have had on society. Rather than looking at the facts, we keep pointing to nonsense perpetuating the existence of a self-licking ice cream cone. It's easier to put your head in the sand and ignore or downplay legitimate grievances when the rules you impose on everyone (and enforced at gunpoint) objectively has zero positive outcomes and a litany of negative outcomes.

I'm sure the TSA confiscated a lot of leatherman multi-tools at the airport, but that isn't a benchmark for their success. Take a guess how many terror plots have been foiled by the FBI/DHS/TSA versus random people over the same time span -- or how many caught by random people were already a person of interest by FBI/DHS/TSA.

It makes no sense because that's not what my post says. In the final paragraph it advocates for a reform of AML law, not total abolition.

> This law says we're not going to allow you to be part of the broader global system while knowingly profiting off of criminality

No it doesn't, please read my post again. Your statement would be correct if you deleted the word "knowingly". AML laws can jail bankers if they provide services to criminals, even if they didn't know of their criminal nature and even if they did actually make extensive efforts to "know their customer". In fact it can jail them even if there was no actual crime happening at all, simply for procedural reporting failures.

That's how people think it works but it's actually not the case, and one of the reasons why SVB ended in disaster. Read those threads and you'll see complaints that SVB was the only bank that "understood" startups, because they appear out of nowhere with millions of dollars. The word "understand" is euphemism for "startups trigger AML filters" because if you show up with lots of money from a single source, that looks like it might be corruption or drug dealing to the automated systems banks use. And then individual bankers aren't allowed to override the checks because they might become corrupt, and it's not just their lives on the chopping block if that happens, it's their bosses lives too.

SVB was built from the start to bank this sort of clientele, so their AML software was configured to allow it, but this led to a huge over-weighting of startups in their depositor base which then led to massive influxes and outflows of capital that they didn't manage properly. Other banks don't have quite the same sort of instability in their depositor base.

Someone did it not too far ago in Canada.

The historic reasons for the us taking a at the swiss have been the hidden, non declared tax moneys from american people and corporations. The Swiss had a cloaking system in place called banking secrecy, it was even codified into law.

America wanted whats owed to them and that was it.

Swiss bankers would fly to the us physically, in person, pick up funds and goods like diamonds and transport them to switzerland without declaring anything. All the little tricks like labelling the funds fraudulently, diamonds in a toothpaste tube, that was part of the service portfolio.

The us promised to sue and the whole decisionmakers knew they will be safe nowehere but in switzerland, a small country with sub par weather, and if the us got hold of them, they will spend a good time of their lifes behind bars. The swiss banking secrecy laws were thus burried for good. The swiss still had the cheek to blather about data protection and privacy and then agreed to hand over a portfolio of "suspicious" accounts.

How hypocritical this was was shown later on, when it became impossible in switzerland and europe for americans to open bank accounts unless employed in Switzerland and being residents.

You say banks have a bad reputation overall, but somehow the swiss banks had a better reputation, even though they are on a level with a carribean tax haven operator.

I don't know if you've looked at the market this morning, but it disagrees with you.

Bob's Deli has a number of on-going costs, like the lease for their storefront, contracts with suppliers to deliver goods, maybe a business loan from a local bank that got them going in the first place.

These are all liabilities that you, the new buyer, must take on. You can't just rule from on high and say these business deals were with the old Bob's Deli and go away with the purchase. An example of a purchaser (apparently/allegedly) trying to say that former liabilities no longer apply: Disney buying up Fox, or Lucasfilm, and saying they no longer have to pay royalties out to authors who wrote novelizations of films, or expanded universe properties[1]

[1]https://www.theverge.com/2020/11/19/21578621/disney-alan-dea...

It does nothing else, the building is worth $100m and the loan amount is $95m.

So the company is worth $5m (the difference) and you could buy it for about that much (ignore whatever the company might DO with the building).

But now the real estate market crashed, the building could only be sold for $80m, but the loan is still $95m. Now the company is worth -$15m. So you could buy it for a dollar, but you still have a building worth less than the loan on it.

Also, no Hank Paulson there with a shotgun to get the job done this time.

https://web.archive.org/web/20230000000000*/https://twitter....

https://www.nytimes.com/2023/03/12/world/europe/swiss-neutra...

Have a line of credit with a big bank that I don’t really use, but means there’s a bank everywhere I can walk into if I needed a large amount of cash or a bank draft, and I pay it off the same day.

Or E[vil]-corp for short.

Edit: I realised a missed opportunity for a Mr. Robot reference.

At least banking has credit unions everywhere, although the ones around me in Canada are also consolidating rapidly.

I think this is a natural consequence of letting the biggest companies control the politicians that set the rules.

(What you say is true for pure free markets, but the banking industry is incredibly regulated, and the government routinely picks winners and losers in it.)

Conversely, more regulations mean more monopolies due to larger first-mover advantages, and the only viable route is to build until you get bought by a parent company who can sort out the admin.

Constant government intervention isn't what makes competition. It being worth it to start and build a company without, in the slim chance you make it, being a verbal and financial punching bag for future politicians, is.

Cause and effect may be the reverse.

Capitalism simplifies and commodifies, to extract more of the surplus.

Consolidation is often rationalized with the goal to "reduce redundancies" (and passing the "savings" onto consumers, naturally).

For example, say I buy a home for $400k and gut renovate it for $200k. Let's say that the specific renovations are going to improve the value of the home, but it's hard to know by how much. If I go to Chase, they will gladly lend me 80% of the $400k ($320k). But Then I need an $80k down payment + $200k for renovations, or $280k cash on hand to make this work.

If I go to a smaller bank that doesn't do things as algorithmically and knows the local market, they might say "hey, we're gonna give you the $320k down payment and then we think that in that area of Boston and based on what you are doing, the house is going to be worth $150k more when you finish renovations, so we're gonna finance 80% of that $150k as well ($120k). You are still going to need to prove that you have your $80k down payment + $30k (20% of $150k) + $50k (the difference between what renovations cost and what they will add to value of home), or $160k total. So in this example, I need to have $160k in the bank if I want to make this whole transaction work with Regional Bank X, whereas with Chase, I need $280k.

It seems like most normal people operate as though money... is money. What should change in the way most normal people do what they do with... whatever it's called now?

https://en.wikipedia.org/wiki/Money_market_account

Then, according to the CEO of the bank, the Fed leaked to the press.

If you have an account with noname for $3,000k and noname has 12 accounts with localcorp1-localcorp12 each of $250k -- and noname goes poof, what happens?

I think, according to the preSVB rules, you get $250k from FDIC and then get a very strong claim to $2,750k from the rest of noname's assets (if no BigBank steps in to buy the part of noname you're connected to).

https://www.fdic.gov/consumers/banking/facts/priority.html

You'll (probably) get your money back, but after how much time?

Side note: what HOA needs more than $250K in reserves? I'm all for a rainy day fund but I'd be asking for a reduction in dues...

Small startups and business can easily end up with cash in the multi-millions. We are talking about companies with a handful of employees, too small to warrant a full time financial focused position. As the OP mentioned, there is zero reasons we can't have a zero risk depositor account. And I think most folks would be happy to pay a small fee for the service, but fees should not be necessary as the provider can still get overnight rates. But the only reason we don't have one right now is because the government doesn't want to interfere with the banks ability to make money off of our deposits.

EDIT: For some extra context, I know someone that had a swap account at SVB. In theory they were protected, but they still lost access to their funds for multiple days, which can be very problematic for a business. And on top of that it wasn't (and still isn't) clear how one would recover swap accounts, so they spent the weekend reaching out to lawyers. At this point they have probably spent a week of time sorting this mess out. They are a small biotech focused on finding cures for diseases and have zero interest/resources for financial engineering. And for companies that typically only have 1-2 years of runway, loosing a week of productivity is a huge distraction.

If market value is 10% less than face value for these securities on average, then the Fed would have unrealized losses of about $700 billion. But the Fed doesn't have the same insolvency or liquidity risks that ordinary commercial banks do.

The US dollar would go down in value if there were more dollar sellers than buyers. That would happen if those with dollars had something else to buy. The Us dollar index is up a bit today, so far. I'd imagine at the moment that a run on the dollar would be unlikely. But there could be some combination of circumstances . . .

Certainly for up to $250,000 deposited at an FDIC insured institution, it is absolutely true that you can assume that you have cash deposited and available. If at any time the bank gets itself into a position where they can’t make good on that, FDIC will fix it so you still have your cash.

That is precisely the mechanism that the federal Government makes available that gives you a place to park your cash.

There is this saying that if you are not paying for it you are the product. Curious that people only apply it for search and email services.

That's basically what bond mutual funds are (including money market mutual funds, which closely simulate savings accounts via $1 share price), and they seem to have a market.

I mean they're trying to work with it: https://www.federalreserve.gov/paymentsystems/fednow_about.h...

Yes republicans in Congress will try to force a crisis, no it won't actually mean government bonds become worthless.

If you are holding 10 year treasuries and were planning on selling them on the secondary market in July, yeah that could be very bad.

Can't bonds like these just be hold in custody at the bank, like stocks? They're property title no? Should my bank in the EU go bust, AFAIK, my stocks are mine. Isn't that the case for short-term US treasuries?

As for physical certificates, didn't the entire world move to digital certificates about 20 years ago? I remember my family having those old physical certificates where you'd cut some pieces of the paper out of them and then you'd go at the bank to get your dividends. And there wasn't much security: you stole these and they were literally yours, with nobody who could verify who they belonged to. These physical "bearer" certificates have been the plot of a great many movies but I think it's now (mostly?) a thing of the past?

Actually I would argue the exact opposite is true. Russia and China have never had it so good, why should they throw away all the hard earned advantages they've gained just because some 3rd term teddy bear president tells them to?

Part of the reason they don't fire this gun is precisely that they'd lose out on a lot of value. But then, what do they do if the US signals strongly that it is going to go ahead and inflate the currency sharply, meaning they're only going to get a de facto big discount anyhow?

And I don't mean that as a simple question, where I'm implying a certain answer I'm trying to convince you of. You have to game this out like a game of chess, where this cascades out into a huge decision tree. The tree has gotten complicated lately. Taking economic damage to deal your enemy a bigger economic blow is getting disturbingly close to a rational move lately, in cold global realpolitik terms. Would China be willing to bet they could roil the US in enough domestic chaos that US leadership would become uninterested in stopping their incursion into Taiwan, even if it meant taking a hit themselves? I'm not saying the answer is "yes". I'm saying "the answer is a lot more complicated than it was a decade ago".

The alleged promise of Bitcoin in various uses like an inflation hedge during economic turmoil have not borne fruit.

If you want to gamble, might as well buy real banks instead of fake banks anyway.

I can't even --

Whatever happened to "1 BTC = 1 BTC" do they not teach that to kids these days?