Wall Street slides after major Swiss banking takeover

  • The Fed to work with five central banks to keep the U.S. dollar in rotation
  • Another bank on the verge of collapse was acquired by its competitor
  • Study: More banks could fail if half of depositors suddenly withdraw cash

The logos of the Swiss banks Credit Suisse and UBS are displayed at Paradeplatz in Zurich, Switzerland, Sunday March 19, 2023. (Michael Buholzer/Keystone via AP)

NEW YORK (NewsNation) — Stock futures rebounded slightly overnight — although still in the red — after UBS acquired Credit Suisse, a bank on the verge of collapse in the wake of the Silicon Valley Bank and Signature Bank fallout.

The Swiss government brokered the deal, hoping it will help stabilize the international banking market and avert a global financial crisis.

The recent failures of both SVB in California and Signature Bank in New York set off wide customer concerns where people would panic and drain banks, triggering a catastrophic financial crisis.

However, the federal government quickly stepped in, taking over both banks and assuring customers their deposits were safe.

The Federal Reserve announced Sunday that it will be working with at least five central banks around the world to keep the U.S. dollar in heavy rotation and available throughout the global financial system.

Last week, the Fed set up a $25 billion funding program to make sure banks have enough liquidity to cover customer needs. But some financial experts actually blame the Fed for the banking crisis due to its decision to raise interest rates to get a handle on inflation

A major bank acquisition could bring the international banking market some much-needed stability.

Still, Sen. Elizabeth Warren (D-Mass.) expressed her concerns about customer vulnerability on CBS’s “Face the Nation” Sunday morning.

“Small businesses need to be able to count on getting their money to make payroll, to pay the utility bills. Nonprofits need to be able to do that. These are not folks who can investigate the safety and soundness of their individual banks,” Warren said.

Sen. James Lankford (R-Okla.) told NewsNation that he believes that ultimately American taxpayers will take on the cost of saving the failed banks, despite the president saying that the money will come from the fees banks pay into the government’s deposit insurance fund.

“Banks get their income from customers who have accounts at the bank. They pay higher rates and fees so account holders will pay higher rates and fees in the days ahead to be able to cover this loss at Silicon Valley Bank and Signature Bank,” Lankford said.

A new study conducted by the Social Science Research Network claimed more U.S. banks could also crash, saying that 186 American banks could fail if half of their depositors suddenly withdraw their money.

U.S. Treasury Secretary Janet Yellen said the American banking system remains sound.

“Americans can feel confident that their deposits will be there when they need them,” Yellen said.

Even with these recent moves and measures, there still remains uncertainty about the banking industry.

NewsNation writer Devan Markham contributed to this report.

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