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Comment by stephenitis | Hacker News Reader

Any predictions on if they'll just let this bank implode naturally?

I feel like we are close on the verge of a event that sets off the recession. It feels like the banking sector is going to be the fuse again.

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Not a chance of a natural implosion. CS is one of a very small number of globally systemically important banks.

CS stopped being globally systemically important a decade ago. More and more so by selling off pieces of the bank the past few years

They've dropped in the rankings but still have over $1T AUM. Far bigger than SVB.

I think the AUM comparison is something everyone needs to be careful of. Vanguard has a lot of AUM from me (from my point of view anyway), but it’s (hopefully) 100% passed through to security issuing organizations. They only get to rake a fraction of a percent from me for their operations.

Wayyyyy different than a bank with $billions in checking and savings accounts where they can do ??? with it.

Wikipedia disagrees with you. CS is listed among 30 global systemically important banks. https://en.wikipedia.org/wiki/List_of_systemically_important...

They are a bit less important than they once were in terms of volume, but they are still massively interconnected with the rest of the system. There is zero chance they‘re just left to implode without governments and central banks stepping in.

They'll just disappear and the pieces of it be sold off. They're not that interconnected anymore since they've been selling everything the past few years.

>CS stopped being globally systemically important a decade ago.

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

Princeton University Professor of Economics Alan Blinder said literally the opposite on Bloomberg today.

We are all globally systemic. We are the world. We are the children

I think a relevant question is who is "they" in this case. We've talked endlessly about the US Treasury and the Fed, but CS is based in Switzerland. A country with a long and storied history of banking independence. The US and EU aren't going to stand by and do nothing since our businesses likely have major exposure but one would hope the Swiss would deal with this appropriately.

CS operates in 50+ countries. All the largest entities have resolution/winddown plans agreed with their regulators. In reality they probably won’t be used because the SNB and Fed will fear contagion.

The resolution process is outlined by FINMA, this was all defined after 2008 and the bailout of UBS: https://www.finma.ch/en/enforcement/recovery-and-resolution/...

Yes, but the SNB and FINMA (and the Federal government) will try many other things before it comes to that.

I hope the Swiss will let it fail. That's appropriate.

Swiss govt is signaling they will backstop it. https://www.ft.com/content/0324c5a6-cecd-4fb3-85b3-7cdc99a33...

No, the taxpayers will foot the bill. Can’t have bank CEOs missing out on their hundred million dollar compensation, that would ruin the system! It’ll just be 2008 all over again - the people who screwed up will be rewarded, everyone else will be punished.

That's what the newscycle and everyone else is spinning it as. So, most likely it's just a slow moving crash that we're witnessing but it already happened.

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