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Privata lånefonder får investerare världen över att darra. Nu reagerar även regeringen.   Finansmarknadsminister Niklas Wykman varnar för ”krisförlopp i ekonomin”. Sedan den globala finanskrisen 2008 har marknaden för privata lånefonder (”private credit”) vuxit kraftigt – från några hundra miljarder dollar till över 2 000 miljarder dollar i dag  Risken uppstår om många investerare vill ta ut sina pengar samtidigt. Då kan fonder tvingas sälja tillgångar billigt och dra ner på utlåningen, vilket kan leda till förluster, konkurser och att banker och andra aktörer blir mer försiktiga med att låna ut pengar. I en intervju med SvD varnade Riksbankens chef för finansiell stabilitet, Olof Sandstedt, för att data kring de privata kreditfonderna är ganska bristfällig, både i Sverige och internationellt. Johan Carlström SvD 27 april 11:11 https://www.svd.se/a/L4oMjx/regeringen-lyfter-risker-med-privata-kreditfonder On July 15, 2007, the New York Times published an article titled “The ri...

Banks’ soaring exposure to trading firms creating ‘inherent fragility’, warns S&P Large investment banks have become increasingly reliant on markets financing. Trading firms such as Citadel Securities have reshaped financial markets, with their growth fuelled by lending from traditional investment banks that have retreated from making proprietary bets. Banks’ gross exposure to hedge funds and trading firms was in the trillions,  meaning tail risks, which have a low likelihood of occurring but can have a significant impact if they do, were “high”. Financial Times 15 April 2026 https://www.ft.com/content/942b091b-add3-4ffd-911a-6a9d9738f2ea?syn-25a6b1a6=1 Ares limits withdrawals from $10.7bn private credit fund Redemption requests across industry surge as exodus of wealthy individuals accelerates The $623bn investment group said it had capped redemptions from the Ares Strategic Income Fund at 5 per cent — a threshold built into the fund that allows it to limit outflows in any one...

Without a clear distinction between temporary liquidity support and protection for insolvent institutions, the Fed’s independence turns into cover for ad hoc bailouts, and monetary policy becomes hostage to weak institutions and authorities’ reluctance to admit supervisory failure. With each successive crisis over the past decade and a half, from the 2007-08 financial crisis to the 2020 COVID-19 shock and the 2023 regional-bank turmoil, the Fed has steadily expanded the scope and scale of its interventions.  What began as emergency liquidity support has now become a recurring feature of financial-market management. The turmoil of 2023  extended support to roughly $9 trillion in uninsured deposits, vastly expanding the safety net. The benchmark for central-bank restraint was set by Walter Bagehot more than a century ago: https://en.wikipedia.org/wiki/Walter_Bagehot lend early and freely, but only to solvent institutions, against good collateral and at a penalty rate.   Und...

Riksbankschefen Erik Thedéen vill att bankerna lättare ska kunna använda sina buffertar.  Reglerna för kapitalkraven behöver förenklas utan att man underminerar banksystemets motståndskraft.  Han välkomnade även att Riksbanken tar över ansvaret för den kontracykliska kapitalbufferten. ”Det unika med den kontracykliska bufferten är att den kan omvandla ett buffertkrav som uppfattas som tvingande till användbart kapital. När den släpps ökar bankens manöverutrymme och risken för en onödig kreditåtstramning, så kallad credit crunch, minskar”, sade han.  DI 31 mars 2026 https://www.di.se/live/thedeens-krav-pa-bankerna-forbered-for-stormar/ Thedéen: Buffertar ska vara användbara https://www.riksbank.se/sv/press-och-publicerat/nyheter-och-pressmeddelanden/nyheter/2026/thedeen-buffertar-ska-vara-anvandbara/ Big US banks add $600bn in value as deregulation spurs gains In the aftermath of the 2008 financial crisis, the biggest US banks were encumbered with regulations that made inv...

 When banks collapse, the question always arises: Where were the supervisors? Time and again — at Silicon Valley Bank, at Credit Suisse, ahead of the 2008 subprime mortgage crisis — they’ve failed in their responsibility to ensure the safety and soundness of both individual institutions and the broader financial system. Banks must produce living wills detailing how they could be wound down if they failed — without, of course, knowing in advance which among myriad possible events might be the cause of said failure. As a result, the documents go on for thousands of pages, which no one can possibly internalize and which are unlikely to be of much use in an actual crisis. Supervisors and bankers must communicate better.  Bill Dudley Bloomberg December 22, 2025 https://www.bloomberg.com/opinion/articles/2025-12-22/bank-failures-how-to-stop-them-let-me-count-the-ways   Big Banks Are Supposed to Fail Without Causing Panics. Is That Even Possible? - Living wills https://englundma...

  On Sept. 15, 2008 Lehman Brothers failed.  Within weeks the whole U.S. financial system was caught in the downward spiral of a massive bank run, on a scale not seen since the 1930s.  Yet there was an important difference from the 1930s bank runs: in 2008, the panic mainly resulted in flight from “shadow banks,” nonbank institutions that performed bank-like functions.  Conventional banks were largely immune from the 2008 panic because deposit insurance and federal regulations – a consequence of the 1930s bank runs – protected them. The clear lesson of 2008 is that effective financial regulation is essential. For three generations after the great bank runs of 1930-31, America avoided “systemic” banking crises — crises that threaten the whole financial system, as opposed to individual institutions.  This era, which Yale’s Gary Gorton calls the Quiet Period, was the result of New-Deal-era protections — especially deposit insurance — and regulations that limited ba...

Aside from a contraction stemming from covid-19 lockdowns, the world economy has not suffered a synchronised recession for over 15 years Myopia, also known as near-sightedness and short-sightedness,   distant objects appear blurry, while close objects appear normal. To many observers, contemporary capitalism has grown flabby, as can be seen in the armies of consultants, social-media influencers and crypto-traders who produce little, if anything, of lasting value.  At the first hint of trouble rich-world governments open their wallets, leading to a political settlement we have called “bail-outs for everyone”.  During the energy shock of 2022, European governments allocated support worth 3% of GDP to help firms and households.  After the collapse of Silicon Valley Bank in 2023, Uncle Sam stepped in to guarantee deposits.  Politicians are quick to offer support to “strategically important” firms in trouble. And after they intervene, they are slow to pull back....

Published a century ago, F. Scott Fitzgerald’s “The Great Gatsby” captured the culture of an overheated economy on the brink of demise. Just as Jay Gatsby fell from the height of fortune to an ignominious death, the 1920s roared with financial overindulgence until the markets drowned in the Wall Street crash of 1929.  The Great Depression followed, and the consequences for the global economy proved calamitous. Today we find ourselves again dancing toward new highs in the stock market. Speculative money is once more pouring into risky investment schemes, with staggering sums of money being thrown at artificial intelligence and cryptocurrencies.  But rather than heed a century of hard-won lessons, the Trump administration’s financial regulators are embracing dissolute policies to keep the punch flowing. We should be heeding the words of the former Federal Reserve chairman William McChesney Martin, who warned that market stewards must be willing to serve as the “chaperone” who ca...

  More deposit insurance means more moral hazard and taxpayer risk. Bad ideas never die, but they do get worse. An example is the embrace by the Trump Administration and some Republicans of the Elizabeth Warren idea to expand federal bank deposit insurance. The legislation would raise the Federal Deposit Insurance Corp. limit to $10 million from $250,000 except for global systemically important banks (G-SIBs) like JPMorgan Chase, Citigroup and Bank of America. Credit unions and midsize banks say they need a higher insurance limit to compete with the goliaths. It’s true the 2010 Dodd-Frank Act entrenched the biggest banks as “too big to fail.”  But they are also required to comply with stricter regulation, including liquidity and capital standards and regular stress tests. Capital requirements for most midsized banks are about 7% versus upward of 10% for most giants. Even if a higher insurance limit reduces the risk of bank runs, it won’t prevent deeply insolvent banks from fai...

  In the aftermath of the 2008 financial crisis, the biggest banks were required to fund at least 5% of their total holdings with equity instead of borrowed money. Now the three main US regulators — the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency — have recommended letting the biggest banks purchase more Treasuries with borrowed money. They’re also considering excluding all US debt and central bank reserves from capital requirements. To put it mildly, there are reasons to be wary of these ideas. Moreover, there are better ways to address dysfunction in the Treasuries market, which is too big to rely on a small number of highly leveraged banks. Bloomberg editorial 7 July 2025 https://www.bloomberg.com/opinion/articles/2025-07-07/weaker-banks-won-t-stabilize-the-treasury-market My view is that the vast majority of banks’ capital requirements should be set under the main capital rules (the Basel Endgame), more like other count...

  One of Jamie Dimon’s daughters called him up from school with a question more than a decade ago: “Dad, what’s a financial crisis?”  The billionaire who runs JPMorgan Chase & Co. tried to put her at ease.  “It’s the type of thing that happens every five to seven years,” he told her, he later testified to the Financial Crisis Inquiry Commission.  https://englundmacro.blogspot.com/2024/05/dad-whats-financial-crisis.html Fed stumbled badly in its attempt to update US capital rules and bring them into line with the international Basel standards, which led to a humiliating climbdown by American regulators last year. My view is that the vast majority of banks’ capital requirements should be set under the main capital rules (the Basel Endgame), more like other countries.  Regulators should also have discretion to impose extra requirements if individual banks are squeezing much more risk out of their models than peers, or falling down on risk management or governan...

... to bring down long-term yields. But will it work? The plan is to soon lower the supplementary leverage ratio for banks, which should theoretically allow them to hold more U.S. government debt, lend more freely or both.  The SLR, established in 2014, is aimed at ensuring that banks have sufficient capital to absorb losses, particularly during periods of stress, and requires them to hold a specific amount of high-quality capital relative to their total leverage exposure. A potential revamp of the SLR  has already gained support from the banking sector.   Vivien Lou Chen MarketWatch 27 May 2025 https://www.marketwatch.com/story/treasury-secretary-bessent-has-a-plan-to-bring-down-long-term-yields-but-will-it-work-bbe73dfe

Maintaining faith in the banking system should come first. Project 2025’s view of deposit insurance is that it interferes with proper market discipline. What we know so far about the White House plans is that it wants to consolidate several banking and finance regulators, including the FDIC, into a single group, possibly under the Office of the Comptroller of the Currency, However, the FDIC is a special case. It is funded by levies on banks, not Congressional appropriations, so there are no tax dollars to save.  Also, its independence is somewhat protected by not coming under the Treasury — as the OCC does — so its boss isn’t a political appointee.  It’s notable that the FDIC decided to cover all uninsured depositors at SVB and Signature Bank in 2023 There are sensible debates to be had about the moral hazard of too much protection, leaving banks and their clients with too little responsibility for the risks that lenders take.  But it’s absurd to expect every ordinary fam...

  Sometime soon, it’ll probably have to subject its stress tests to public scrutiny, highlighting serious flaws in what has become its primary tool for ensuring the resilience of the banking system. Hopefully, it’ll take this as an opportunity for improvement. Failing that, it should reconsider its reliance on the exercise. Stress tests can be immensely valuable:  In 2009, they helped pull the global financial system back from collapse, shedding much-needed light on banks’ balance sheets and restoring the confidence needed to recover.  Less so, though, is the annual process that has followed, in which the Fed tries to assess whether banks can survive hypothetical worst-case scenarios. Bloomberg Editorial 17 January 2025 https://www.bloomberg.com/opinion/articles/2025-01-17/fed-risks-making-stress-tests-on-banking-system-weaker    “Bank stress tests are fun. They are interesting. So is a game of Monopoly. Do not mistake either for reality,” https://englundmacro.b...

US remained vulnerable to the same combination of problems that caused major recent crises,  including the 1980s savings and loan collapse,  https://englundmacro.blogspot.com/2021/10/before-1986-act-s-were-primary-source.html https://englundmacro.blogspot.com/2021/04/financial-crises-get-triggered-about.html S&L Savings and Loans Banking Crisis Rolf Englund the 2008 financial crisis  https://englundmacro.blogspot.com/2024/09/us-counts-its-bank-bailout-billions.html and the 2023 regional bank runs.  FDIC Says It Should Have Done More to Supervise First Republic Bank https://englundmacro.blogspot.com/2024/09/worst-performance-for-stocks-since-2023.html The Silicon Valley Bank Rescue Changed Capitalism https://englundmacro.blogspot.com/2023/03/the-silicon-valley-bank-rescue-changed.html In each case, deregulation and looser supervision enabled the rapid growth of new products and nonbank financial companies that later proved to be riskier than anticipated. Financial...

 Switzerland might have averted the collapse of Credit Suisse, its second largest bank, if the country’s financial regulator took a harder line overseeing it and enforcing capital rules, a parliamentary report found Friday.  One of the key recommendations: possibly more capital at the country’s remaining big bank, UBS. The conclusions came in a sweeping report meant to be Switzerland’s ultimate lessons-learned look at an event that threatened the core of the country’s identity as a well-run, financial safe haven. Wall Street Journal 20 December 2024 https://www.wsj.com/finance/banking/what-switzerland-should-have-done-to-save-credit-suisse-5d96ef3c Credit Suisse gold https://englundmacro.blogspot.com/2023/03/credit-suiss-gold.html

  https://www.bloomberg.com/news/articles/2024-11-15/credit-suisse-survived-a-bank-run-only-to-succumb-to-scandal Credit Suisse gold https://englundmacro.blogspot.com/2023/03/credit-suiss-gold.html Gamla Mor Anna och bankernas affärsmodell https://englundmacro.blogspot.com/2023/03/gamla-mor-anna-och-bankernas.html   The Bank Run of 2023 Could Easily Happen Again - Bill Dudley https://englundmacro.blogspot.com/2024/04/the-bank-run-of-2023-could-easily.html Tillbaka till Rolfs länktips 18 November 2024 https://englundmacro.blogspot.com/2024/11/rolfs-lanktips-18-november-2024.html

  Financial Stability Board says life insurers and REITs also at risk from the combination of funding vulnerabilities and unrealized losses In a new report released Wednesday, FDIC Quarterly 2024 Vol 18 No 3   the Financial Stability Board, an international body of global regulators, delved into the issues that brought about the collapse of Credit Suisse, the failure of SVB, Signature and First Republic, and the liquidation of Silvergate. Steve Goldstein MarketWatch 23 October 2024 https://www.marketwatch.com/story/theres-still-a-weak-tail-of-banks-prone-to-the-runs-that-brought-down-svb-and-credit-suisse-regulators-warn-4c1dec58 Shadow Banks; Global supervisors at the Financial Stability Board call these non-bank financial intermediaries https://englundmacro.blogspot.com/2022/11/banks-need-to-worry-about-shadow-banks.html JPMorgan to take over First Republic  https://englundmacro.blogspot.com/2023/05/jpmorgan-to-take-over-first-republic.html Tillbaka till Wall Street och...

Finansinspektionen, FI, det osäkert om alla nischbanker klarar kravet för stabil finansiering, enligt Di:s beräkningar. I måndags förra veckan publicerade FI ett ”rättsligt ställningstagande” där det framgår hur banker ska beräkna det som heter stabil nettofinansieringskvot, NFSR, vilket är ett krav på tillräckligt stabil finansiering Fi förklarade då att bankerna vid beräkningen av NSFR endast får inkludera 50 procent av den obundna inlåning som kommer via inlåningsplattformar (se faktaruta).  Detta eftersom sådan inlåning är en mer flyktig finansieringskälla än exempelvis traditionell inlåning, av vilken bankerna får inkludera 95 procent i NSFR. Bankanalytiker som Di har talat med är samtidigt av uppfattningen att merparten av nischbankerna fram till nu har räknat in 90 procent av plattformsinlåningen i sitt NSFR-mått. FI bekräftar också att ”många av instituten i dag tillämpar en mindre strikt faktor” än den korrekta på 50 procent.  Martin Rex DI 7 oktober 2024 https://www....

Sixteen years after Lehman’s collapse Unlike in the US, where public funds were repaid years ago, European governments continue to nurse losses on stakes in some of their largest banks. Even with Commerzbank stock at a 10-year high, the government is still sitting on a €2.1 billion loss. Under Treasury Secretary Henry Paulson, the federal government forced the biggest US banks to accept state funds as part of its Troubled Asset Relief Program (TARP) in October 2008.  Some banks went back for more but within two years the government had been largely repaid, in many cases even making a profit.  When it sold its final shares in Citigroup Inc. in December 2010, the Treasury Department trumpeted a $12 billion realized gain --- “So long as the music is playing, you’ve got to keep dancing. We’re still dancing.”  Chuck Prince, former chairman and chief executive of Citigroup, interviewed only a month before the music stopped 2007.  Citigroup chairman Chuck Prince and ABBA: D...