Thomson Financial News
April 20, 2008
SourceZURICH (Thomson Financial) - The international financial system was close to the brink in March when joint action by the U.S. Federal Reserve and JP Morgan Chase & Co. avoided the collapse of investment bank Bear Stearns, Credit Suisse Group's ex-CEO Oswald Gruebel said.
The breakdown of the comparatively small investment bank would have triggered a global run on other financial institutions around the world and the situation would have spiraled out of control, he said in an interview with Swiss Sunday newspaper SonntagsBlick.
Gruebel, chief executive of Switzerland's second largest bank from 2004 to 2007, said that central banks fortunately realized that they had to de facto take over the interbanking market.
'We've narrowly escaped a system collapse. This has never happened before,' Gruebel said.
Nevertheless, the impact of the financial market crisis will still be felt over the coming years as banks tighten credit, which will in turn substantially limit economic growth, he said.
andrew.ge.thompson@thomsonreuters.comat/vs
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