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Eu Mulls Bank Law To Impose Losses On Depositors

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http://www.reuters.com/article/2013/04/10/us-eu-banking-bailin-idUSBRE9390NQ20130410

European Union ministers will consider a proposal this week to impose losses on interbank deposits of lenders in dire financial trouble as they shape a draft EU law introducing powers that would also penalize those with big savings.

Such an idea, should ministers back it, could further rattle the confidence of lenders, already nervous about draft legislation to determine who alongside shareholders should suffer losses when a bank gets into trouble.

EU finance ministers, gathering in Dublin this Friday, will discuss how to shape this law that could take effect from 2015, covering what is known as bank recovery and resolution.

The talks follow the recent decision to impose heavy losses on some depositors in Cyprus, in return for an international bailout. That set a precedent, which is likely to be mirrored in these EU rules, making losses for large uninsured savers a permanent feature of future banking crises.

But the ministers will have to tread carefully in their discussions.

ECB President Mario Draghi recently cautioned that Cyprus's bailout was "no template", in a bid to ease market fears that bank deposits would in future be fair game for international lenders supporting struggling euro zone countries.

Now this is going to help stabilise the European banking system......

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They are trying to flush out all of the cash on the sidelines back into property to push up asset prices. Only problem is, that will not work, they need new borrowers to borrow even larger amounts.

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Legalised theft it is, then.

how can not receiving credit back from an insolvent entity be legalised theft

It takes an extraordinary amount of mental gymnastics to suggest that not using tax (legalised theft) to make good on sh!t investments that have failed (bank credit) is the exact opposite of what it is

As for this law, comedy gold, its existed for an eternity, its called solvency

220px-Coal_bituminous.jpg

ohhh look its a faceless albino

Edited by Tamara De Lempicka

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Could be positive, if framed correctly (I wonder if it will be...).

If depositors are on the hook, then perhaps they'll start taking more interest in how things are run, and maybe we'd see a lot more pressure for prosecutions. No laughing..

It might give people a decent choice too- mattress or account. The interest rates on offer would have to adequately reflect the risks involved.

I suspect this is not on the cards.

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Could be positive, if framed correctly (I wonder if it will be...).

If depositors are on the hook, then perhaps they'll start taking more interest in how things are run, and maybe we'd see a lot more pressure for prosecutions. No laughing..

It might give people a decent choice too- mattress or account. The interest rates on offer would have to adequately reflect the risks involved.

I suspect this is not on the cards.

I would normally agree but if you asked people in the 90s what they would do with their cash if savings rates were 1.9% they would say stick it under the mattress, but today people are still happy to park their money in the bank. If they drop the rates over a long enough period say 3-5y people will just treat them as the new norm + the fear people have about society will make them think that their house will be broken into.

Fear will keep people in banks until the day their savings have been stolen.

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how can not receiving credit back from an insolvent entity be legalised theft

It takes an extraordinary amount of mental gymnastics to suggest that not using tax (legalised theft) to make good on sh!t investments that have failed (bank credit) is the exact opposite of what it is

As for this law, comedy gold, its existed for an eternity, its called solvency

I know what you're saying, but it's not as simple as that. And if the 'template' is perfectly legal, why the need for a law to make it so?

Let's say I have a Cyprus bank going bust. Now, if I steal from only some clients (small investors) I can keep the big one (ECB) and stay in business while they go to the wall. Actually, if I steal a whole heap from them, I can keep my other wobbly but not quite bust bank going too. It's EU law, innit, so they can't sue me for screwing up or professional negligence or anything. Or, since you mention it, for trading while insolvent. In fact as long as I can invoke EU law and steal depositors money whenever I'm a bit short, I can stay perfectly solvent.

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The rule seems to be that the first €100,000 is safe, so just spread your savings across several banks. This has been considered good practice since 2007. In fact everyone should have multiple bank accounts to hedge against one bank being hacked or failing a software upgrade. Also, make sure you save with a different bank than you borrow from - in a rescue savings and loans would be netted off.

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All this does, as in Cyprus, is to reduce the banks Liabilities.

They get not 1C of cash, theyve already had that.

What they should be doing is getting more out of their ASSETS....lets set a floor for bad lending rates....if for example, a bank has mortgages out there at base +1%...lets help the bank by ensuring the risk on this asset is properly priced....small businesses are asked to bay base plus 6%.

so lets get money in from the very people that are "cashing in" on the cheap lending, which is much of the cause of the crisis....suggest ANY and ALL loans at less than sensible business lending, base + 6%,...be changed to such a rate forthwith.

This WILL bring in extra cash...It will also allow them to pay decent rates to savers, so that the bank is forming CAPITAL for the future.

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Impose losses? If a bank failed, there would be losses anyway.

The governments should stop fiddling with things, making stuff up on the hoof etc. We already have well documented ways of folding up companies, liquidating assets to pay for liabilities and so forth.

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Impose losses? If a bank failed, there would be losses anyway.

The governments should stop fiddling with things, making stuff up on the hoof etc. We already have well documented ways of folding up companies, liquidating assets to pay for liabilities and so forth.

Unfortunately they haven't found a good way of liquidating coutries properly. Even Iceland had to be saved by the other Nordic countries.

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The rule seems to be that the first €100,000 is safe, so just spread your savings across several banks. This has been considered good practice since 2007. In fact everyone should have multiple bank accounts to hedge against one bank being hacked or failing a software upgrade. Also, make sure you save with a different bank than you borrow from - in a rescue savings and loans would be netted off.

Ah, but in Cyprus the netting off was good for debtors.

£100k debt + £200k savings = £100k savings.

Not a likely scenario, but in principle that's how it worked.

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The commissioner who launched this idea is Belgian (I can't recall his name) and Christian-Democrat. The Belgian PM is a Socialist and sworn enemy of the Christian Democrats and he said he will oppose this proposal. Interesting.

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I would normally agree but if you asked people in the 90s what they would do with their cash if savings rates were 1.9% they would say stick it under the mattress, but today people are still happy to park their money in the bank. If they drop the rates over a long enough period say 3-5y people will just treat them as the new norm + the fear people have about society will make them think that their house will be broken into.

Fear will keep people in banks until the day their savings have been stolen.

There is not enough physical cash in the system to pay everyone their money due.......what is stopping the freezing of accounts or the rationing of peoples own money.

So much for the promise to pay the bearer on demand......if there were a real demand they couldn't or wouldn't be able to handle it without help.....then what would the promises buy you? ;)

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Ah, but in Cyprus the netting off was good for debtors.

£100k debt + £200k savings = £100k savings.

Not a likely scenario, but in principle that's how it worked.

......yes, savers do also have debt, keep the savings and debt together and end up with having no debt. ;)

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There is not enough physical cash in the system to pay everyone their money due.......what is stopping the freezing of accounts or the rationing of peoples own money.

Nothing at all, as is happening in Cyprus at the moment with capital controls. The 100,000 'guarantee' doesn't guarantee anything if there isn't enough dosh in the system. It's a clear case of financial mis-selling.

Mattresses are go.

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Nothing at all, as is happening in Cyprus at the moment with capital controls. The 100,000 'guarantee' doesn't guarantee anything if there isn't enough dosh in the system. It's a clear case of financial mis-selling.

Mattresses are go.

All be in the same boat together then.....lying in one helluva mess...................huge resets mean there will be no winners. ;)

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http://www.reuters.com/article/2013/04/10/us-eu-banking-bailin-idUSBRE9390NQ20130410

Now this is going to help stabilise the European banking system......

I wish they would get their terminology right.

the correct word is CREDITORS....they pay the money.

...and they make the rules.

not prudent to steal from the people that pay the bills.

(as I've said before,the cyprus stuff is now one HUGE geopolitical warzone)

russia is annoyed,the anglo-saxons are politely but firmly slightly miffed,and share some of the same greviances as the russians

the turks are desparate to get a foothold on the gas reserves too..

.....methinks it's a bit messy.

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I wish they would get their terminology right.

the correct word is CREDITORS....they pay the money.

...and they make the rules.

not prudent to steal from the people that pay the bills.

(as I've said before,the cyprus stuff is now one HUGE geopolitical warzone)

russia is annoyed,the anglo-saxons are politely but firmly slightly miffed,and share some of the same greviances as the russians

the turks are desparate to get a foothold on the gas reserves too..

.....methinks it's a bit messy.

I can see in the not too distant future a team-up with russia(not yet because there are still some hardline commies to be dealt with),but they did help us out quite a lot getting rid of the nazis last time......seems like it might happen again.

this time dresden happens with nukes....no more second chances.

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All this does, as in Cyprus, is to reduce the banks Liabilities.

They get not 1C of cash, theyve already had that.

What they should be doing is getting more out of their ASSETS....lets set a floor for bad lending rates....if for example, a bank has mortgages out there at base +1%...lets help the bank by ensuring the risk on this asset is properly priced....small businesses are asked to bay base plus 6%.

so lets get money in from the very people that are "cashing in" on the cheap lending, which is much of the cause of the crisis....suggest ANY and ALL loans at less than sensible business lending, base + 6%,...be changed to such a rate forthwith.

This WILL bring in extra cash...It will also allow them to pay decent rates to savers, so that the bank is forming CAPITAL for the future.

Freeing up liabilities, frees up capital - which is what needs replenishing. Cash is irrelevant.

Edited by Police

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  • 246 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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