A Bloomberg house editorial yesterday reviewed the significance of the shotgun wedding between UBS and CS: “A decade and a half after the last global financial crisis, regulators still aren’t confident that they can safely manage the demise of a systemically important bank, even a relatively small one.” Bloomberg admitted that “any other outcome would have wrought even greater havoc,” but they fear for what this now portends.
“Yet make no mistake: This was a bailout. The Swiss government, on behalf of taxpayers, has agreed to provide UBS … what it wanted and created an even bigger bank with explicit state guarantees. This reinforces the perception that governments will always stand behind systemically important banks—an expectation that encourages even more irresponsible behavior.”
