UBS Group AG agreed to take over its longtime rival Credit Suisse Group AG for more than $3 billion, pushed into the biggest banking deal in years by regulators eager to halt a dangerous decline in confidence in the global banking system. The deal between the twin pillars of Swiss finance is the first megamerger of systemically important global banks since the 2008 financial crisis when institutions across the banking landscape were carved up and matched with rivals, often at the behest of regulators.
The Swiss government said it would provide more than $9 billion to backstop some losses that UBS may incur by taking over Credit Suisse. The Swiss National Bank also provided more than $100 billion of liquidity to UBS to help facilitate the deal.
Swiss authorities were under pressure to make the deal happen before Asian markets opened for the week. The urgency on the part of regulators was prompted by an increasingly dire outlook at Credit Suisse, according to one of the people familiar with the matter. The bank faced as much as $10 billion in customer outflows a day last week, this person said.
The sudden collapse of Silicon Valley Bank earlier this month prompted investors globally to scour for weak spots in the financial system. Credit Suisse was already first on many lists of troubled institutions, weakened by years of self-inflicted scandals and trading losses. Swiss officials, along with regulators in the U.S., U.K. and European Union, who all oversee parts of the bank, feared it would become insolvent this week if not dealt with, and they were concerned crumbling confidence could spread to other banks.
An end to Credit Suisse’s nearly 167-year run marks one of the most significant moments in the banking world since the last financial crisis. It also represents a new global dimension of damage from a banking storm started with the sudden collapse of Silicon Valley Bank earlier this month.
Unlike Silicon Valley Bank, whose business was concentrated in a single geographic area and industry, Credit Suisse is a global player despite recent efforts to reduce its sprawl and curb riskier activities such as lending to hedge funds.
Credit Suisse had a half-trillion-dollar balance sheet and around 50,000 employees at the end of 2022, including more than 16,000 in Switzerland.
UBS has around 74,000 employees globally. It has a balance sheet roughly twice as large, at $1.1 trillion in total assets. After swallowing Credit Suisse, UBS’s balance sheet will rival Goldman Sachs Group Inc. and Deutsche Bank AG in asset size.

The above is excerpted from a current article in The Wall Street Journal, and was edited for brevity.

Yes just saw this! Is anyone considering nibbling on any of the banks? If so how are you doing so? Andrew Bary had a nice piece in Barron’s where he favored JPM, MS and GS… it’s a good read.

Read that article too. - No - I’ll “pass” on banks. (Don’t ride roller-coasters either) ISTM Buffett has a modest amount in BAC. (2nd or 3rd largest holding after AAPL). Seems like a safer way to get some exposure.
I just checked PRISX (TRP Financial Services Fund). It’s held up better than I’d expect.
Approximate change in NAV:
YTD -12%
1 year - 22%

A bank will fail if there's a run on the bank in excess of the amount of cash the bank can raise.
Negative equity makes it hard for a bank to raise a lot of cash, since even if it could liquidate its investments without driving prices down, it still wouldn't raise enough cash to cover 100% of deposits.
The failure arises because of the run on the bank that cannot be met. Merely having negative equity doesn't cause the failure. If we assume that depositors act rationally (there's your joke for the day), then insured depositors will not pull out their money. Under that (ridiculous) assumption of rationality, it also matters what percent of deposits are uninsured.
To take an extreme case, if there's just a single dollar in a bank that's uninsured, the bank is going to be able to cover a withdrawal of that dollar, regardless of how deeply negative its net equity is. And the remaining dollars, being insured, won't be pulled in a panic.
Here are two sources with fairly hard figures on percentage of uninsured deposits.
https://www.investors.com/etfs-and-funds/sectors/banks-report-most-exposed-to-uninsured-deposits/
https://www.businessinsider.com/signature-svb-us-banks-have-over-1-trillion-uninsured-deposits-2023-3
The IBD piece is based on an S&P report from a few days ago and lists the 10 banks with the highest percentage of uninsured deposits along with their loans and held-to-maturity (HTM) investments. Those are the investments that are hard to liquidate without taking losses, and marked-to-market tend to be below par.
At the top of the list is BNY Mellon (96% uninsured), though with only 31% of deposits invested in loans and HTM securities. Both SVB and Signature bank are high in both uninsured deposits and HTM+loans (around 90% or higher).
While not at the same stratospheric levels, Citigroup is notable for having 77% of deposits uninsured (First Republic is at 68%), and 64% of deposits in HTM+loans.

Company			Symbol	Uninsured deposits / 	Loans and HTM/		YTD %
domestic deposits 	total deposits		change
(higher is riskier)	(higher is riskier) 	
Bank of New York Mellon	(BK)		96.5%			31.2%		 -0.1%
SVB Financial Group	(SIVB)		93.9%			94.4%		-53.9%
State Street		(STT)		91.2%			40.1%		 -1.8%
Signature		(SBNY)		89.7%			93.3%		-39.2%
Northern Trust		(NTRS)		83.1%			54.5%		 -3.1%
Citigroup		(C)		77.0%			64.6%		  4.3%
HSBC Holdings		(HSBA)		72.5%			47.4%		 11.9%
First Republic Bank	(FRC)		67.7%			110.6%		-69.1%
East West Bancorp	(EWBC)		65.9%			91.1%		-13.9%
Comerica		(CMA)		62.5%			72.8%		-36.6% 

The Business Insider piece looks at "15 major banks" as of the end of 2022. Here too, Citigroup stands out. It must be nice to be TBTF.

Financial institution	Deposits not insured by the FDIC
Signature Bank			90%
SVB				88%
Citigroup			85%
First Republic			68%
JPMorgan 			59%
BNY Mellon			56%
Citizens Financial		49%
KeyCorp				47%
PNC				46%
Truist				46%
M&T Bank			45%
Fifth Third 			42%
Bank of America			33%
Goldman Sachs			33%
Huntington Bancshares		33%

Leading Wall Street economist Nancy Lazar discusses the resilience of the U.S. economy, despite several canaries in the coal mine examples of financial strain. Lazar shares her insights on why the economy is holding up better than expected and what we can expect moving forward, including the impact of the Federal Reserve’s efforts to slow down the recovery.

Banks are teetering as customers yank their deposits. Markets are seesawing as investors scurry toward safety. Regulators are scrambling after years of complacency.
The sudden collapses of Silicon Valley Bank and Signature Bank — the biggest bank failures since the Great Recession — have put the precariousness of lenders in stark relief. The problem for SVB was that it held many bonds that were bought back when interest rates were low. Over the past year, the Federal Reserve has raised interest rates eight times. As rates went up, newer versions of bonds became more valuable to investors than those SVB was holding.
The bank racked up nearly $2 billion in losses. Those losses set off alarms with investors and some of the bank’s customers, who began withdrawing their money — a classic bank run was underway.
Even before SVB capsized, investors were racing to figure out which other banks might be susceptible to similar spirals. One bright red flag: large losses in a bank’s bond portfolios. These are known as unrealized losses — they turn into real losses only if the banks have to sell the assets. These unrealized losses are especially notable as a percentage of a bank’s deposits — a crucial metric, since more losses mean a greater chance of a bank struggling to repay its customers.
At the end of last year U.S. banks were facing more than $600 billion of unrealized losses because of rising rates, federal regulators estimated. Those losses had the potential to chew through more than one-third of banks’ so-called capital buffers, which are meant to protect depositors from losses. The thinner a bank’s capital buffers, the greater its customers’ risk of losing money and the more likely investors and customers are to flee.
But the $600 billion figure, which accounted for a limited set of a bank’s assets, might understate the severity of the industry’s potential losses. This week alone, two separate groups of academics released papers estimating that banks were facing at least $1.7 trillion in potential losses.

Midsize banks like SVB do not have the same regulatory oversight as the nation’s biggest banks, who, among other provisions, are subject to tougher requirements to have a certain amount of reserves in moments of crisis. But no bank is completely immune to a run.
First Republic Bank was forced to seek a lifeline this week, receiving tens of billions of dollars from other banks. On Thursday, the U.S. authorities helped organize an industry bailout of First Republic — one of the large banks that had attracted particular attention from nervous investors.
The troubles lurking in the balance sheets of small banks could have a large effect on the economy. The banks could change their lending standards in order to shore up their finances, making it harder for a person to take out a mortgage or a business to get a loan to expand.
Analysts at Goldman believe that this will have the same impact as a Fed interest rate increase of up to half a point. Economists have been debating whether the Fed should stop raising rates because of the financial turmoil, and futures markets suggest that many traders believe it could begin cutting rates before the end of the year.
On Friday, investors continued to pummel the shares of regional bank stocks. First Republic’s stock is down more than 80 percent for the year, and other regional banks like Pacific Western and Western Alliance have lost more than half their values.
Investors, in other words, are far from convinced that the crisis is over.

The above section contains excerpts from a lengthy article in The New York Times, which was heavily edited for brevity.

"Consulted by policymakers and able to nudge his peers into action, JPMorgan Chase CEO Jamie Dimon played a key role in a bank rescue effort this week -- a situation sparking reminders of 2008.."
"Dimon, who helms the largest US bank by assets, also came to the rescue in the 2008 financial crisis by buying Bear Stearns and some assets of Washington Mutual."
https://www.livemint.com/news/world/jpmorgan-chief-jamie-dimon-s-key-role-in-rescue-of-first-republic-bank-11679103476432.html
Kudos to the big banks for helping the flailing regional banks. Even Peck's bad boy, Wells Fargo, is ponying up in the effort. There are some winners out of the mess!

Old_Joe : are you self promoting yourself ?"
@Derf- sorry if it came across that way. No, I just think that if a dummy like me can come up with ideas to keep the financial system from self-destruction then maybe the government isn't really trying all that hard. If it's a good idea to insure up to 250k then why isn't a good idea to also insure above that? What's magical about 250k?
As for the argument that above 250k those deposits are big enough to take care of themselves, obviously that ain't necessarily true, but they sure as hell are big enough to pay for some basic insurance against stupid banks.
As we are seeing, it doesn't take a whole lot of stupid banks to threaten the entire system, and that includes you and me, bro.

On rather short notice, Cohanzick invited people to listen to David Sherman talk about the significance of “recent developments.” Reportedly, 90 people called in. No slides, just David at his desk talking through two topics and fielding questions.
Highlights:
1. none of his funds have exposure to banks or thrifts. Early in his career, at Leucadia, he was taught that this additional financial sector focus offered “incremental gains that were not worth the risk.”
2. in a “moral hazard” sort of way, institituions worldwide have “adopted an umbrella policy: avoid any failure at all cost.”
3. Sherman’s policy preference would be a 1-2 bps / year charge for insurance on accounts over $250k with an opt-out provision and some sort of preferential payments scheme (akin, I think, to what happens in a bankruptcy liquidation) to avoid runs on the bank. (James Mackintosh, in Friday's WSJ, speculates on investment regulations to pursue the same end; he suggests requiring banks to invest only in short-term Treasuries as backing for regular deposits, with greater flexibility for special high-yield accounts.)
4. He believes interest rates will remain higher for longer than commonly expected, unless the fed has to accommodate a systemic risk. A fed “pivot” now would be “ a bad sign regarding speculation and future inflation.”
5. the commercial real estate market, which is reliant on floating rate securities, is a major and generally unrecognized risk. High quality lenders like BlackRock “are handing the keys back to the bank.” Eventually the government will need to pursue a solution like the Resolution Trust (1989-1995) to work to resolve the savings & loan crisis.
6. Q: is the banking system close to melt-down? A: No. With the exception of a few incidents involving insolvent micro banks, there are no “FDIC-regulated banks where uninsured depositors didn’t get their money back.”
7. Q: are you positive on high yield this yield? A: we don’t speculate but “In general, active HY will outperform stocks over the next couple years based on valuations.”
8. Q: has the risk-return equation become more compelling? Are you playing offense or defense now? A: “I love this question. Compliance hates it. We love markets like this, even if they’re frustrating, difficult or stressful because they create volatility and volatility creates opportunity. Things were more shaky a year ago ... we’ve become more offensive over the past several months Dry powder not diminished but new money is getting invested at substantially higher returns. Dry powder (at year’s end his funds were 30% and 70% “dry powder”) reflects view that we’ll have more opportunities and we will not be forced to take duration risk. We’re avoiding highly stressed or distressed issuers whose business model is questionable relative to other opportunities. We think there will be more of opportunities; commercial RE will raise its ugly head to create them.”
9. Q: where do you get such great ideas? A: swiped one from a student in my Global Value Investing class at NYU. (Roughly.)
 
10. Q: Has the opportunity set changed since 1/1/2023? A: "We focus on business model, the group tried to be disciplined in our credit work in all periods though everyone occasionally gets out of their lane. We’re focusing on staying at the highest level of the capital structure. Social media makes everything worse. Investors do less work, act more in reaction to events, and since it’s easier to move money, it’s also easier to over-react. Across portfolios, we have the highest level of leveraged loan ownership in years. LLs significantly higher return than the bonds, assuming no rate collapse.”
David either reads the board or has a news alert set for his name, so I’m confident that if I’ve materially misrepresented his words, he’ll help guide us back to the light.
For what that’s worth, David

Technically that is true. An FDIC-insured bank is ineligible to file for bankruptcy under the bankruptcy code. "Instead, regulators seize insolvent or unsound banks or thrifts and give the Federal Deposit Insurance Corporation (FDIC) the authority to resolve them ... almost always ... through a receivership." However, a bank's parent holding company can file for bankruptcy, as SVB Financial has done.

See 11 U.S.C. §§ 109(b), (d) (2006) (stating that banks are ineligible for bankruptcy, so that neither the bank nor the bank's creditors can place the bank in bankruptcy). [However,] bank holding companies can file for bankruptcy in the United States, and many of the largest bankruptcies on record have been bank holding companies. See ... Washington Mutual.

Why Banks Are Not Allowed in Bankruptcy (footnote 2)
11 U.S. Code § 109
SVB Financial bankruptcy filing

Per CNBC: "Treasury Secretary Janet Yellen told senators that government refunds of uninsured deposits will not be extended to every bank that fails, only those that pose systemic risk to the financial system."
I think that's the right approach to help address the moral hazard question. Given news of the past week or so, if you still happen to have cash in accounts far above the FDIC/SIPC coverage limits, you should probably review your risk level and diversify into multiple banks and/or 'safer' government debt.
https://www.cnbc.com/2023/03/16/svb-signature-bank-failures-yellen-says-us-banking-system-is-stable-and-deposits-remain-safe.html

Gut observation here, but this week things have not all completely marched in 100% lockstep like they did in '08. There are some pockets of green and/or counter-trending moves happening that kind of makes this more orderly.
Had the government not intervened last weekend, I think the odds of a systemic risk situation would've been significantly greater. But still ... on the whole, for the moment, things are 'dramatic' but not 'existential' like they were in '08. Back then, I was genuinely concerned about the very fabric of the global financial system. Not feeling anywhere that dreadful right now.
If you're invested in good stuff, just turn the TV off and don't look at your account for a few days. Or as I told someone yesterday, take some play money (if you have it) and actually BUY or ADD TO something good to engage in some reverse psychology and reassure yourself that things will get better.
(I've been buying/adding this week myself, as i still put idle cash to work for the long term)

@sma3, SVB Financial was the holding company for the SVB Bank. So, this is the bankruptcy filing the holding company that also had some minor brokerage and asset management businesses.
SVB Bank was taken over by the Feds/FDIC. The government-run SVB Bank is now among the safest and with the best/unlimited deposit protections.
https://www.cnbc.com/2023/03/17/svb-financial-seeks-bankruptcy-protection.html

Honestly, a roller coaster ride like I can't remember, ever before.
I only began investing in 2003. So maybe a bunch of you are more well versed in it all.

I recall that the Global Financial Crisis of 2007/2008 was much worse.
It felt (to me anyway) that the entire financial system might collapse.
Many financial institutions became bankrupt (notably Lehman Brothers and Washington Mutual).
GM and Chrysler also faced bankruptcy and were bailed out after cash
was diverted from the Troubled Asset Relief Program (TARP).
The S&P 500 had a weekly decline greater than 20% in October 2008.
I hope to never experience another financial crisis of this magnitude again in my lifetime.
Once is enough!

Well, since we don't know Crash's age and financial situation today as compared to the 2008 crash, we don't know if he can handle it. That was--hard to believe--15 years ago. It's a mistake to assume everyone should keep a stiff upper lip, keep calm and carry on during a difficult period. Circumstances and risk tolerances differ.
This is why, I should add, financial planners exist. A good one can assess your financial situation and risk tolerance and tell you, look your goals are X and you have this much cushion for losses, so you can afford to wait out this volatile market. Or, they can say, you're way overexposed to stocks, given your age and situation. You should dial back your exposure. I presume most people here are self-directed, though.

https://www.sec.gov/Archives/edgar/data/809593/000113322823001332/abatrcf-html6116_497.htm
497 1 abatrcf-html6116_497.htm AMERICAN BEACON AHL TARGETRISK CORE FUND - 497
American Beacon AHL TargetRisk Core Fund
Supplement dated March 15, 2023
to the
Prospectus, Summary Prospectus, and Statement of Additional Information, each dated May 1, 2022
The Board of Trustees of American Beacon Funds has approved a plan to liquidate and terminate the American Beacon AHL TargetRisk Core Fund (the “Fund”) on or about July 7, 2023 (the “Liquidation Date”), based on the recommendation of American Beacon Advisors, Inc., the Fund’s investment manager.
In anticipation of the liquidation, effective immediately, the Fund is closed to new shareholders. In addition, in anticipation of and in preparation for the liquidation of the Fund, AHL Partners LLP, the sub-advisor to the Fund, may need to increase the portion of the Fund's assets held in cash and similar instruments in order to pay for the Fund’s expenses and to meet redemption requests. The Fund may no longer be pursuing its investment objective during this transition. On or about the Liquidation Date, the Fund will distribute cash pro rata to all remaining shareholders. These shareholder distributions may be taxable events. Thereafter, the Fund will terminate.
The Fund will be liquidated on or about July 7, 2023. Liquidation proceeds will be delivered in accordance with the existing instructions for your account. No action is needed on your part.
Please note that you may be eligible to exchange your shares of the Fund at net asset value per share at any time prior to the Liquidation Date for shares of the same share class of another American Beacon Fund under certain limited circumstances. You also may redeem your shares of the Fund at any time prior to the Liquidation Date. No sales charges, redemption fees or termination fees will be imposed in connection with such exchanges and redemptions. In general, exchanges and redemptions are taxable events for shareholders.
In connection with its liquidation, the Fund may declare distributions of its net investment income and net capital gains in advance of its Liquidation Date, which may be taxable to shareholders. You should consult your tax adviser to discuss the Fund’s liquidation and determine its tax consequences.
For more information, please contact us at 1-800-658-5811, Option 1. If you purchased shares of the Fund through your financial intermediary, please contact your broker-dealer or other financial intermediary for further details.
***********************************************************
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

Finally a good financial reason to live here ( in MA).
Also worth noting you do not pay state income tax on interest from a MA bank. But my local bank only pays 1% on their MM account, and next to nothing on savings

Apparently something broke in the banking sector not just in US…
Excerpt from article:

In recent days, a crisis in the financial sector has centered around regional banks as Silicon Valley Bank and Signature Bank collapsed, both casualties of poor management in the face of eight interest rate hikes by the Federal Reserve in the last 12 months. Wednesday morning attention turned to the big banks with shares of Credit Suisse hitting an all-time low.
Saudi National Bank, Credit Suisse’s largest investor, said Wednesday it could not provide any more funding, according to a Reuters report. This comes after the Swiss lender said Tuesday it had found “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.
As Credit Suisse dragged down the European Bank sector, U.S. big bank shares declined in sympathy. Citigroup and Wells Fargo shed 3%, while Goldman Sachs and Bank of America fell 2%. The Financial Select Sector SPDR Fund lost 2.9% in premarket trading, giving up its 2% pop on Tuesday.
Regional Banks, whose rebounded helped lift sentiment for the broader market on Tuesday, fell back into the red again. The SPDR S&P Regional Banking ETF (KRE) was down 3% in the premarket, led by losses in Old National Bancorp, Zions Bancorp and Fifth Third Bancorp. To be sure, shares of First Republic Bank were clinging to gains.

https://cnbc.com/2023/03/14/stock-market-today-live-updates.html
From Reuters:

Credit Suisse on Tuesday published its annual report for 2022 saying the bank had identified "material weaknesses" in controls over financial reporting and not yet stemmed customer outflows.
Switzerland's second-biggest bank is seeking to recover from a string of scandals that have undermined the confidence of investors and clients. Customer outflows in the fourth quarter rose to more than 110 billion Swiss francs ($120 billion).

https://reuters.com/business/finance/credit-suisse-shares-drop-fresh-record-low-cds-widen-2023-03-15/
Oakmark funds sold their remaining shares last week.

There are parallels to the 1970s but it's not the same today and the 1970s and their resolution weren't the way they are often described: https://foreignpolicy.com/2022/07/01/global-economy-policy-financial-crisis-1970s/

When a bank goes bankrupt, depositors are at risk because they are general creditors of the bank. FDIC insurance guarantees that $250K/account type/owner will be covered even if the bank has no assets to pay with.
Brokerages are different. The securities in your brokerage account, whether MMF shares or T-bills or corporate bonds, or mutual funds or stocks, are still in your account (and untouchable by creditors) if the brokerage goes bust. SIPC insurance protects against someone at the brokerage stealing those securities.

The securities in your Schwab account—including fully paid securities for stocks and bonds and excess margin securities—are segregated in compliance with the U.S. Securities and Exchange Commission's Customer Protection Rule. This is the legal requirement for all U.S. broker-dealers. Your segregated assets are not available to general creditors and are protected against creditors' claims in the unlikely event that a broker-dealer becomes insolvent

https://international.schwab.com/account-protection
Admittedly there are secondary concerns. If the brokerage does flop, it may not be able to give you access to your securities (or cash) efficiently. That's an operational problem, not one of lost assets. Right now, I might be questioning Fidelity, because it uses UMB bank for processing checks and ACH/EFT transfers, and Moody's has placed UMB Financial under review, along with First Republic, Zions Bankcorp., etc.
https://www.reuters.com/business/finance/moodys-downgrades-signature-bank-junk-places-six-us-banks-under-review-2023-03-14/