Benjamin Franklin famously observed that nothing is certain in life except death and taxes. If he were around today he’d be tempted to add one more to the list: bailouts. The recent collapse of Silicon Valley Bank—a midsize institution at best with 17 branches in California and Massachusetts and $175 billion in total deposits—followed an all-too-familiar script of panic and rushed government intervention.
Financial distress never takes long to cross the Atlantic. Credit Suisse, one of Switzerland’s two megabanks, had been beleaguered ever since the financial crisis because of a series of missteps and scandals. The bank reported a loss of $7.9 billion in 2022 and depositors withdrew more than $100 billion in the same year. When share prices plunged and deposit flight accelerated following SVB’s collapse, the Swiss National Bank had to step in with a $54 billion lending lifeline. It wasn’t enough. On Sunday Credit Suisse was sold at a knock-down price to its old rival UBS.
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