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  • EU's Rehn: Big depositors could suffer in future bank bailouts under new law

    From reuters.com

    Big bank depositors could take a hit under planned European Union law if a bank fails, the EU's economic affairs chief Olli Rehn said on Saturday, but noted that Cyprus's bailout model was exceptional. "Cyprus was a special case ... but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down," Rehn, the European Economic and Monetary Affairs Commissioner, said in a TV interview with Finland's national broadcaster YLE. "But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. ... (full story)

  • #1
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  • Apr 7, 2013 4:23pm Apr 7, 2013 4:23pm
Anybody believe "Cyprus's bailout model was exceptional"?
  • #2
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  • Apr 7, 2013 4:25pm Apr 7, 2013 4:25pm
  •  Trader#2767
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In other words, companies or individuals with more than 100,000eur be afraid!!!
  • #3
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  • Apr 7, 2013 5:26pm Apr 7, 2013 5:26pm
This was written in central banking formula from the beginning ... nothing new ... Central Banks never loose ... or am I wrong??? ... this is the same as default ... we failed by trying to avoid something that is written in the Code (like Agent Smith)
  • #4
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  • Apr 7, 2013 5:36pm Apr 7, 2013 5:36pm
In other words - companies and individuals - go buy really cheap stocks and real estates instead keeping your $4-5 million accounts in the bank. At least I would do it (if I had that amount of money) - and will even get some profit by renting whatever possible (at least to pay the property taxes and some profit for gas ;-).
  • #5
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  • Apr 7, 2013 6:07pm Apr 7, 2013 6:07pm
  •  Trader#FA0F
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Quoting wolf162
Anybody believe "Cyprus's bailout model was exceptional"?
not at all especially with this develpoment
  • #6
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  • Apr 7, 2013 6:43pm Apr 7, 2013 6:43pm
This policy will bring disaster in long term. Businesses and individuals will move funds out of any shaky banks. In this case, we will see lot more banks failing. And big banks that get too much deposits will have hard time generating decent returns and will be tempted to make risky investments.
  • #7
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  • Apr 7, 2013 7:22pm Apr 7, 2013 7:22pm
Of course is exceptional, except that exception is the rule now!
Use me as a contrarian indicator
  • #8
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  • Apr 7, 2013 11:23pm Apr 7, 2013 11:23pm
It's time to run out from eurozone...
  • #9
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  • Apr 8, 2013 1:02am Apr 8, 2013 1:02am
We can see the real face of EU.............
  • #10
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  • Apr 8, 2013 1:03am Apr 8, 2013 1:03am
Thiefs and thiefs and thiefs.............
  • #11
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  • Apr 8, 2013 1:31am Apr 8, 2013 1:31am
Today Europe, tomorrow everywhere else...

Worldwide monetary system collapse (and restructuring) occurs about every 40 years, and it's now due (overdue even).
In the days of old when sailors were bold, and seldom if ever contented.
  • #12
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  • Apr 8, 2013 2:41am Apr 8, 2013 2:41am
It Blows my mind to see that with everything thats going wrong the EUR keeps going back up. Its not even close to logical or anything neer the truth scenario, all of this could be setting up a bigger tipe of collaps. Were all buying when the fact is we know the EUR is worthless. So when logick finaly privails and that usualy takes a ong time to privail there is going to be a majour donfall. We create the market and we created this short bull. time and time again, what will the end result of this action be ?
  • #13
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  • Apr 8, 2013 3:27am Apr 8, 2013 3:27am
Quoting wolf162
Anybody believe "Cyprus's bailout model was exceptional"?
For 'exceptional' read 'the first'.

Quoting Cornelis
It Blows my mind to see that with everything thats going wrong the EUR keeps going back up. Its not even close to logical or anything neer the truth scenario, all of this could be setting up a bigger tipe of collaps. Were all buying when the fact is we know the EUR is worthless. So when logick finaly privails and that usualy takes a ong time to privail there is going to be a majour donfall. We create the market and we created this short bull. time and time again, what will the end result of this action be ?
Collapse of Euro-banks (Bankia and others) is not the same as collapse of the Euro. A large number of American banks have collapsed since Lehman Bros and yet the dollar remains highly valued and traded - even if regarded with suspicion.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #14
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  • Apr 8, 2013 3:34am Apr 8, 2013 3:34am
Bingo, its a fascinating albeit unorthodox stimulus. The high end London property market has rocketed in recent years due to flight capital, I wonder if a slightly different version of that phenomena can be repeated causing bubbles to form in many assets? The sad part is none of the flight is likely to create much needed rises in employment.

Quoting michaelpelly
In other words - companies and individuals - go buy really cheap stocks and real estates instead keeping your $4-5 million accounts in the bank. At least I would do it (if I had that amount of money) - and will even get some profit by renting whatever possible (at least to pay the property taxes and some profit for gas ;-).
"The meek shall inherit the earth.." Yeah right, good luck with that shit..
  • #15
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  • Apr 8, 2013 3:52am Apr 8, 2013 3:52am
Not in the future they are already suffering now Because Cyprus been a tax heaven and attracted many local and International Investments where banks are providing better returns like 5% a month based on the Investment which made lot of people to dump the money in the banks now big shots are flushing the funds out of the bank I wonder why ECB Always have a problem of bailout not matching it with particular countries expectation!!
  • #16
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  • Apr 8, 2013 4:54am Apr 8, 2013 4:54am
The Cyprus situation was an experiment on acceptability: there wasn't a major revolution because of it, therefore, they will most likely use it again on another country in order to save the politicians and their super-rich backers.
Lost....
  • #17
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  • Apr 8, 2013 5:33am Apr 8, 2013 5:33am
I lern new things every day.
  • #18
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  • Apr 8, 2013 5:37am Apr 8, 2013 5:37am
Its great being able to read the insights of people who have been doing this a long time. gives us newbies alot of reading but between all the doom and gloom profets there is stuf worth learning.
  • #19
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  • Apr 8, 2013 6:33am Apr 8, 2013 6:33am
I'd agree, it was the beta test for us proles, 'they' got this away without violent protests, they knew how the psychology test would work. They tested reaction with the initial message that all sums would be taxed, when they raised it to anything above 100K it prevented mass anger. They have their template.

Quoting gespiri
The Cyprus situation was an experiment on acceptability: there wasn't a major revolution because of it, therefore, they will most likely use it again on another country in order to save the politicians and their super-rich backers.
  • #20
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  • Apr 8, 2013 1:21pm Apr 8, 2013 1:21pm
Big Banks get "open resolution" ordinary citizens and businesses get bankruptcy. This amounts to class separation in which the debt is more important than the citizenry. Yet it is the people that make the economy function. These steps will lead to a shrinking of the economy. Now what is more important or lawful?
  • #21
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  • Apr 8, 2013 4:38pm Apr 8, 2013 4:38pm
Lovely euro, long long long in the face of such scepticism...at least for a few days.
They're right: bondholders should get shagged (after shareholders). What's left needs to be covered by uninsured deposits, ensuring the the taxpayer is least affected, because the taxpayer has the least to do with any of it.
There can't be many people who are not paying via their taxes for the failures of the banks. Why people (many of them on this thread) are happy with this (implicitly) is beyond me. I certainly am not happy that the UK has taken on hundreds of billions of pounds of debt to rescue its mismanaged financial institutions.
It is clearly more sensible for bondholders to take maximum pain, and uninsured savers to take whatever is left over. It removes the risks of moral hazard that caused this dastardly mess in the first place, and what eventuates is a system in which both bondholders and large depositors take appropriate steps to check the riskiness of the institutions of which they may become creditors. Additionally, banks know this, and thereby you have a chance of influencing real behavioural change.
I have no clue what I'm talking about.
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  • Posted: Apr 7, 2013 3:59pm
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     Newsstand
    Category: High Impact Breaking News
    Comments: 21  /  Views: 5,396