202211092342 - Credit Suisse Crisis Explained

title: Credit Suisse Crisis Explained | How will it affect you? | LearnApp
url: https://www.youtube.com/watch?v=Ijjera1_GOY
topic: #banks #markets
creator: Learn App

Credit Suisse: buyer, seller, broker, creation, insurer
Related: 202211092342 - Credit Suisse Crisis Explained

how does this relate to Lehman Brothers?

Bank wants to give out loans to society

• mainly for houses
  They take a loan from the bank at a (6%) loan from the bank
• given to people who can't afford the house
• after it comes to the bank, the bank will package to into a security
• stacks of paper that represent a group of mortgages
  • Mortgage-backed security
  • in order to manage the risk of the security, the bank will take out insurance as a 202503211709 - Credit Default Swap
• in the unlimited need for greed, there were too many houses and the value of those houses was not equivalent to market value
  • because the house purchaser did not have the money to pay for the house, they bank does not receive the money they need to pay for the 202503211709 - Credit Default Swap

lost 15 billion investing

• when fear sets in, the premiums go higher

6 Billion in bonds
1.1 trillion in assets

capital structure

Tier 1:

• Sum of common shares (equivalent for non-joint stock companies) and stock surplus, retained earnings, other comprehensive income, qualifying minority interest and regulatory adjustments
  • to use for the bonds: $130 Billion

Tier 2

• Sum of cap instruments meeting the criteria for Tier 1 and related surplus, additional qualifying minority interest, and regulatory adjustments

Tier 3

sum of cap instruments meeting the criteria for tier 2 and related surplus, additional qualifying minority interest, qualifying loan loss provisions, and regulatory adjustments