Credit Suisse, a global bank, was also facing a major threat, but was temporarily averted by Swiss authorities announcing a backstop for the bank. However, the calm was only restored thanks to emergency cash from central banks and industry players.
Nearly $200bn in direct central bank support has been required so far, with the Fed agreeing to loans of nearly $153bn to other banks in recent days. The banking industry is also coughing up billions to help, with JPMorgan Chase, Bank of America and Citigroup among 11 lenders providing a $30bn cash infusion aimed at shoring up confidence in First Republic Bank.
The crisis is likely to make loans harder to come by, as banks will pay much greater attention to the creditworthiness of borrowers, which could make credit less available and more expensive.
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