Finance

Treasury Secretary Bessent says Trump is heading off financial crisis

Published

3 months ago

March 16, 2025

Business Finance News

Treasury Secretary Scott Bessent speaking to CNBC on March 13th, 2025.

CNBC

Treasury Secretary Scott Bessent said Sunday the Trump administration is focused on preventing a financial crisis that could be the result of massive government spending over the past few years.

“What I could guarantee is we would have had a financial crisis. I’ve studied it, I’ve taught it, and if we had kept up at these spending levels that — everything was unsustainable,” Bessent said on NBC’s “Meet the Press.” “We are resetting, and we are putting things on a sustainable path.”

President Donald Trump has made getting the government’s fiscal house in order a priority since taking office. He created the so-called Department of Government Efficiency, led by Elon Musk, to spearhead job cuts and early retirement incentives across multiple federal agencies.

Still, the U.S. debt and deficit problem worsened during Trump’s first month in office, as the budget shortfall for February passed the $1 trillion mark.

Bessent noted that there are “no guarantees” there won’t be a recession.

The market has been on a tumultuous ride as of late as Trump’s widespread tariffs raised concerns about inflation and economic slowdown. The S&P 500 on Thursday fell into a 10% correction from its February high as volatility spiked.

Bessent believes pullbacks like the one the market is in right now are benign, and Trump’s pro-business policies will boost the market and the economy over the long run.

“I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy. They’re normal,” he said. “What’s not healthy is straight up, that you get these euphoric markets. That’s how you get a financial crisis. It would have been much healthier if someone had put the brakes on in ’06, ’07. We wouldn’t have had the problems in ’08.”

“I’m not worried about the markets. Over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great,” Bessent added. “I say that one week does not the market make.”

Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

1 day ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

2 days ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”