Because that would be a bailout and the US government [regulators] said "no bailouts" in this case. Now the FDIC owns all of the banks assets (as a bridge bank) and is trying to sell them (at auction). Hundreds of banks [were] dealt with like this after 2008.
BTW, it's actually not that clear cut in this case that it wasn't a bailout of sorts, because the rules were bent with respect to max deposits:
However, the Treasury Department, the Federal Reserve, and the FDIC announced they would make sure all depositors with accounts at SVB and Signature Bank would have access to their funds by the next day – beyond just the $250,000 guaranteed by the FDIC.
In my reading, the bank's customers were essentially bailed out, but
the bank itself wasn't. But the "no bailouts" slogan still does explain well enough why the bank was not given the kind of loan you ask about. (I suspect that one of the practical differences is that SVB's management won't be able to give itself bonuses from that. At least one Representative said something along those lines, i.e. "no sympathy" for the bank's management.)
Some former FDIC officials even criticized this move, saying that a $200 billion bank in a $23 trillion system (i.e. ~1%) didn't even justify that. For some level of comparison, the banks that failed 2007-2015 and were auctioned by FDIC had at least $500 billion in deposits (and $700 billion in assets) as a group.
Credit Suisse has assets of at least $500 billion and of course that's a larger share of the Swiss banking sector, which seems to be around $3 trillion. (Credit Suisse is also listed as a "bulge bracket bank".) There are probably other differences relating to solvency etc., but I doubt the Swiss government could let Credit Suisse fail as easily even if it were insolvent.
Also, according to one expert, Credit Suisse or any large European [or even large US] bank can't run into the [exact] same issue
as SVB because Basel 4 regulations limit "how much rate mismatching they can take on their held-to-maturity bond portfolios". And such banks "must deduct unrealised losses on securities accounted at fair value from their regulatory capital", whereas "Small banks like SVB can avoid taking negative mark-to-market on bonds portfolio against their CET1 [Common Equity Tier 1], artificially bolstering their solvency capital." So, from what I could gather, SVB reported a CET1 of 15.26% for Q4 2022, which is actually better than Credit Suisse's 14.1%, if the [different] accounting standards are not taken into account.
And that loan from the Swiss central might not be enough. News is now that UBS is in talks for a takeover of Credit Suisse and that
UBS is said to have asked the Swiss government to cover about $6bn (£4.9bn) in costs if it were to buy Credit Suisse, according to sources quoted by Reuters.
And yeah, the potential bill for the takeover which seem almost certain now unless blocked by some other regulators went up a bit, and simultaneously the face value of the bank went down...
Credit Suisse shareholders were deprived of a vote on the deal and will receive one share in UBS for every 22.48 shares they own, valuing the bank at $3.15bn (£2.6bn).
At the close of business on Friday Credit Suisse was valued at around $8bn (£6.5bn).
The federal government said in order to reduce any risks for UBS it would grant a guarantee against potential losses worth $9.6bn (£7.9bn)
The Swiss central bank has also offered liquidity assistance of up to $110bn (£90bn).
In the end the solution doesn't seem that different from what happened to the SVB. As I recall now, SVB also got some $15 billion loan last year from a Federal Home bank, but that wasn't enough. Also, there was a price to pay as the saying goes:
SVB Financial Group had $15 billion of outstanding loans from the Federal Home Loan Bank of San Francisco at the end of 2022—it had none a year earlier—and pledged collateral of almost three times what it borrowed to back the advances.
The loans helped shore up SVB’s liquidity and appear to have coincided with a $25 billion, or 13%, decline in deposits at SVB during the final three quarters of 2022. [...]
Federal Home Loan Banks, also known as FHLBs, were founded to help support housing finance during the Great Depression. Now they direct cash into the banking system, using their implicit government backing to borrow money cheaply.
Those kinds of loans have continued for other bank, of course, the Fed announced $12 billion just a couple of days ago, and more the day before: $152 billion!
According to data made available Thursday, the Fed drew an additional $152 billion in short-term borrowing for banks from its standing loan window, the traditional liquidity backstop for lenders, a dramatic increase against the roughly $5 billion from the previous week.
So yeah, different horses for different courses. Here's a bit more about the borrowing from the Fed.
Banks borrowed $152.85 billion at the Fed on Wednesday, up from $4.58 billion a week before, according to new data released Thursday. The daily average for borrowing last week was $85 billion, compared with $4.4 billion a week earlier, and the most since the 2008 financial crisis.
Meanwhile, the Federal Home Loan Bank system had its biggest day of issuance ever on Monday, issuing $112 billion worth of debt to fund requests from banks looking to solidify their balance sheets.
Banks tapped the Fed’s new funding program for $11.94 billion on Wednesday. The two banks that failed last week borrowed another $142.8 billion. [...]
First Republic Bank announced Sunday it had received funding from the Federal Reserve and JPMorgan Chase, as it tried to convince investors and customers it was stable. The bank didn’t explain what the funding from the Fed was, but the only option would have been the discount window. The bank said Thursday it borrowed from the Fed as much as $109 billion overnight.
Banks are generally skittish about using the discount window and especially afraid of it becoming public. The program is known as the industry’s lender of last resort, offering overnight loans that banks can use to ease a liquidity issue. The Fed would reject an insolvent bank from borrowing, but the program has long carried a stigma that to need the discount window is a sign of dire trouble.
Borrowing is secret and names are withheld for two years, but borrowing has been largely nonexistent since the financial crisis. It spiked briefly in the pandemic, when a group of the biggest banks said they would borrow publicly in an attempt to ease the stigma.
TBH, it is slightly confusing how the secrecy goes along with the reveal we just read (as two years didn't pass.) WSJ didn't explain exactly how they knew who had borrowed. But it's interesting that bridge banks can still do that borrowing, and that they're apparently not considered entirely insolvent... by the Fed.
And as Reuters claims, the one-day record was broken:
The discount window jump crashed through the prior record of $112 billion in the fall of 2008, during the most acute phase of the financial crisis.
Including more than $140 billion in other funding provided to the new bridge banks for Silicon Valley Bank and Signature Bank established by the Federal Deposit Insurance Corp, the central bank's total balance sheet mushroomed by roughly $300 billion in the last week. That reverses a substantial portion of the balance sheet reduction accomplished since last summer.
I added that last para because I wasn't sure from WSJ's reporting whether the lending went to the bridge banks or to the [prior] banks before the failed, but it's confirmed it went to the bridge banks.
It might be the case the Fed "leaked" the info about which banks got the most of those funds to calm fears:
"The numbers, as we see them right here, are more consistent with the idea that this is just an idiosyncratic issue at a handful of banks," said Thomas Simons, money market economist with investment bank Jefferies. The government's support efforts appear likely to work and the size of the numbers reported by the Fed Thursday suggest "it's not like a huge system-wide problem," he said.
But I guess that also makes the "no bailout" much more of a bailout, LOL. In fact, that $142 billion tops what Credit Suisse was promised in the latest announcement (that included its takeover)--$110bn.
There's also a bit more about the new facility (the one that lent $12 billion in one day) in the latter piece, but I'm omitting it here as not so relevant to the Q at hand.
As discussed in a background article from January 2023, the Fed also lowered the DW borrowing costs at the start of the pandemic, and made the "overnight" be 90 days actually.
the premium of the primary credit DW rate over the top end of the federal funds target range was reduced from 50 basis points to zero, ending the penalty cost of borrowing from the DW relative to market funding sources, or other alternatives such as the Federal Home Loan Banks (FHLBs). Second, the maximum term of primary credit was extended from an overnight tenor—the typical limit—to ninety days, with the option to prepay at any time. These policy changes made DW borrowing more economical and flexible, and they remain in effect today.
I guess that kind of short term funding would not have been useful for SVB to save itself, but I'm not entirely sure. Anyhow the fact that they went to the FHLB instead does suggest they envisaged a longer-term problem:
Prior to the pandemic, small banks came to the DW on an ad hoc basis when they had a need for overnight borrowing to meet an unanticipated funding shortfall. When anticipating a more durable need for short-term funds, small banks typically borrowed for term from the FHLBs. Due to their limited sophistication, small banks are not active borrowers in the fed funds market.
One commentator from the BPI says that it's not even clear when
these ($143 billion) loans were given to the two banks:
As far as I know, the Fed has provided no other information on these loans. The loans may largely be discount window loans that had been extended to the institutions before they closed.
FWTW, Paul Krugman did call it a bailout, and these $143 billion didn't even enter into his reasoning. He calls it a bailout simply because all deposits were post-facto covered by FDIC, in excess of prior insurance/promises.
I don't have data for how stigmatizing it is use the (brand new?--at least using 2022-approved terms) Public Liquidity Backstop (PLB) of the Swiss National Bank, which was what was actually what used for CS+UBS now, but it's worth noting that, historically, it's been stigmatizing to use the DWF in the US:
Armantier et al. (2011) provide empirical evidence for the willingness
of banks to pay a premium of 44 basis points on average in TAF auctions from
March 2008 onwards to avoid borrowing from the Fed’s DWF, which increased
after the Lehman bankruptcy to 143 basis points. The magnitude of stigmatization
of the DWF was substantial. It amounted to a deliberate increase in the banks’
borrowing costs by up to 32.5 percent of their net income during the crisis, in
order to avoid accessing the stigmatized standing facility.
In the Eurozone, the stigmatization of the European Central Bank’s (ECB’s)
lending facilities was less severe, because the usage of the ECB’s standing facility,
the marginal lending facility, was less rare in normal times than the usage of
the Fed’s DWF. Nevertheless, there is evidence that the ECB lending facilities
may also have experienced some stigmatization. Cassola et al. (2013) find that
banks were willing to borrow at average premia of up to 30 basis points over the
average overnight unsecured interbank lending rate (EONIA) via the ECB’s regular
Main Refinancing Operations (MROs) by the end of 2007, which indicates a
stigmatization of the ECB’s marginal lending facility.
So while it's still unclear when those two US banks took those $143 billion from DWF, it's clear why that isn't trumpeted in the US.
(Somewhat side, insofar I was not able to find out the exact terms of the Swiss PLB.)