Friday Links: Debit Suisse Needs a Bailout

Posted by Jacob Radke

Happy Friday! This week, piggybacking off of what happened last week, Silicon Valley Bank and Signature Bank both failed and saw their depositors get bailed out. Now, Credit Suisse (formally called Debit Suisse in our office) has a tiny crisis on their hands. Luckily, they got bailed out by the Swiss National Bank with a $54 billion line.

This is all directly tied to rising interest rates. When rates rose at a historic pace, it caused major losses on the banks' balance sheets. One of the only ways to fix that is to reduce rates. When the Fed reduces interest rates, the value of the bank’s bonds rise again, stimulating confidence in the banks once again.

But the ECB said they didn’t care and raised rates another 0.5%, citing that inflation is their sole target and the banking crisis is not out of control. Which is mostly true. Credit Suisse has had its fair share of issues in the past, but other European banks are in a stronger financial position. In the US, banks like JP Morgan Chase, Wells Fargo, Citi, and Bank of America are in strong financial positions (although they have large bond losses).

Smaller banks are the issue. They aren’t held to the same regulations as the largest banks. But that reality is likely going to change for them in the future.

Essentially, we operate in a two-tiered banking system.

Tier one banks are the systemically important banks. These are the "too big to fail" biggest banks. If you have money there, it's a true deposit. You can't lose it.

Tier two is everyone else, the regional/local banks. If you have money there, it's not a true deposit. It's an unsecured loan to that bank. You can lose uninsured deposits in a bank failure.

That is what is subject to change, but at the same time, Silicon Valley Bank calls itself the safest bank in the world because of what the FDIC did for depositors (protecting everything).

Anyways, here’s everything I read and wrote today.


Running the Tape - The Rate Flip

Prisoner's Dilemma - by Graham Stephan (

Whose Fault is it Anyway - The Irrelevant Investor

Banking Crisis Powers Historic Bond Rally - WSJ

Mortgage rates tumble in the wake of bank failures (


Running the Tape - When Banks Fail

Credit Suisse to borrow up to nearly $54 billion from Swiss National Bank (

Moody's cuts outlook on U.S. banking system to negative, citing 'rapidly deteriorating operating environment' (

TikTok needs to be sold or risk nationwide ban, Biden administration says : NPR

T-Mobile is buying Ryan Reynolds’ Mint Mobile for up to $1.35 billion - The Verge

Signature Bank: Third-biggest bank failure in U.S. history (

Meta Plans to Layoff 10,000 Employees in Second Round of Job Cuts - WSJ

Novo Nordisk to Slash Insulin Prices by Up to 75% - WSJ


The Fed’s New Bind: Taming Inflation While Preventing Financial Mayhem | Barron's (

ECB Defies Mounting Banking Strains With Half-Point Rate Rise - WSJ

Economy Shows Signs of Cooling as Bank Troubles Spread - WSJ

What I Think About the Silicon Valley Bank Situation | LinkedIn

U.S. Inflation Cooled in February as Fed Confronts Bank Failures - WSJ

Personal Finance

Savers Pile Money Into Bank CDs as Rates Top 5% - WSJ

Will ChatGPT Improve Financial Literacy? | Morningstar

How Much Money Buys Happiness? - The Big Picture (

What Income Level Makes You Rich? (

Concentration is Not Your Friend (

Three Million U.S. Households Making Over $150,000 Are Still Renters - WSJ

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