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Europe Strikes Deal To Push Cost Of Bank Failure On Investors

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http://uk.reuters.com/article/2013/06/27/uk-eu-banks-idUKBRE95Q02H20130627

The European Union agreed on Thursday to force investors and wealthy savers to share the costs of future bank failures, moving closer to drawing a line under years of taxpayer-funded bailouts that have prompted public outrage.

After seven hours of late-night talks, finance ministers from the bloc's 27 countries emerged with a blueprint to close or salvage banks in trouble. The plan stipulates that shareholders, bondholders and depositors with more than 100,000 euros (84,998 pounds) should share the burden of saving a bank.

The deal is a boost for EU leaders, who meet later on Thursday in Brussels, and can show that they are finally getting to grips with the financial crisis that began in mid-2007 with the near collapse of Germany's IKB.

"For the first time, we agreed on a significant bail-in to shield taxpayers," said Dutch Finance Minister Jeroen Dijsselbloem, referring to the process in which shareholders and bondholders must bear the costs of restructuring first.

The rules break a taboo in Europe that savers should never lose their deposits, although countries will have some flexibility to decide when and how to impose losses on a failing bank's creditors.

"They can affect German savers just as well as they can affect any other investor in the world," German Finance Minister Wolfgang Schaeuble said after the meeting.

So the first sign of a bank in trouble large depositors will flee?

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But ultimately the burden STILL falls on tax-payers.

But not ALL tax-payers - just those who happen to have large deposits in the failed bank.

Edited by Fishman

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But ultimately the burden STILL falls on tax-payers.

But not ALL tax-payers - just those who happen to have large deposits in the failed bank.

Which they won't have any more. If they have any sense that is.

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Which they won't have any more. If they have any sense that is.

But what about Local Councils ?

They have millions in reserve (well they have in the past maybe not so much in future years :( ) - where do they park their cash ?

And large cash-rich companies (big retailers, etc) ?

And pension/insurance companies that keep cash as part of their portfolios ?

Will we see thousands of banking licenses granted (a la Siemens) to holders of large deposits so they can protect their cash ?

Unless of course it's all part of the plan to force depositors with huge amounts of money to buy Government bonds and keep the price high/yield low.

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This sounds like a good candidate for non-news story of the year. What a complete waste of time.

Under the rules, which would come into effect by 2018, countries would be obliged to distribute losses up to the equivalent of 8 percent of a bank's liabilities, with some leeway thereafter.

:lol::lol::lol:

But thorny issues lie ahead, not least whether countries or a central European authority should have the final say in shutting or restructuring a bad bank.

The European Commission, the EU executive, is expected to unveil its proposal for a new agency to carry out this task of "executioner" as early as next week, officials said.

Quelle surprise, we need more just one more taxpayer funded, useless bunch of Brussels bureaucrats, and everything will be hunky dory.

"The most important discussion has yet to start and that is how decisions on restructuring will be made," said Nicolas Veron, a financial expert at Brussels-based think tank Bruegel. "It's premature to say that Europe is getting its act together."

Precisely.

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But what about Local Councils ?

They have millions in reserve (well they have in the past maybe not so much in future years :( ) - where do they park their cash ?

And large cash-rich companies (big retailers, etc) ?

And pension/insurance companies that keep cash as part of their portfolios ?

Will we see thousands of banking licenses granted (a la Siemens) to holders of large deposits so they can protect their cash ?

Unless of course it's all part of the plan to force depositors with huge amounts of money to buy Government bonds and keep the price high/yield low.

Are you proposing that we bail-out every bank that goes bust with tax payer money?

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But ultimately the burden STILL falls on tax-payers.

But not ALL tax-payers - just those who happen to have large deposits in the failed bank.

Everyone is a tax payer. They happened to be tax payers who took the decision to lend money to a bank in return for interest in the hope that the bank would repay it. If it goes bust with your money, bad luck. At least you get your £85k back.

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  • 242 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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