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		yieldcrv on March 24, 2023 \| parent \| context \| favorite \| on: Reasons the banking crisis isn’t a repeat of 2008 adding liquidity via “policy maker’s tools” doesn't fix the problem or provide assurance that Credit Suisse isn’t the beginning of something else CS AT1 bondholders now have gigantic $17bn hole in their balance sheet/portfolio The whole AT1 bond market is experiencing losses of similar size to the treasury bond market If anybody collateralized those? Bigger losses Losses aren't controversial, but they are when theyre losses with other people’s money who arent investors

ororroro on March 25, 2023 [–]

AT1 bonds are specifically designed for this purpose though. They offer high returns but at a higher risk. How would one collateralize an asset that is designed to default catastrophically while hiding this fact from the lender?

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