The era of TBTF is Over. Bail-in's are the New Normal...

A

achilles28

EU, US and Canada doing away with TBTF implicit-backstop. Bail-in's, re Cyprus, are the new model. Customer deposits over FDIC are open season, during bankruptcy. Every bank for itself.

In other news, C, BOA, GS, JPM and HSBC hold notional derivative positions valued at over 350 Trillion.... JPM is leveraged 30 to 1 against it's derivative book..... What could possibly go wrong? It's all "hedged"....
http://blogs.reuters.com/financial-...volcker-rule-and-sifis-back-in-the-spotlight/

Citigroup Says Debt Beats Peers in Advance of ‘Bail-In’ Rule
http://www.bloomberg.com/news/2013-...ats-peers-in-advance-of-new-bail-in-rule.html
German Push to Accelerate Bank Bail-Ins Joined by Dutch
http://www.bloomberg.com/news/2013-...rate-bank-bail-ins-joined-by-dutch-finns.html
Don't worry, be happy, says Mark Carny
http://www.ctvnews.ca/business/cana...-under-global-bail-in-system-carney-1.1243888
 
I think this is a good thing in the long run. At least it is being talked about. The problem with TBTF is that with no risk perception, banks can do anything they like. The risk is borne ultimately by the system. There was never sufficient money set aside for insuring bank deposits so detailing how TBTF will be dealt with is useful.

That said, I can't help but wonder if this is just the banks doing an IPO on the bad banks. Wall street will sell garbage banks to IPO "investors" and once they have their money out, what happens happens.

A sounder policy would be to pick a bank every 10 years and destroy it as an example to the the rest. That is a great motivational tactic to prevent bad behavior.
 
The end of moral hazard is great. Definitely. Problem is, repeal of glass-steagal. Co-mingling speculative and commercial banking operations. Depositors are now on the hook for opaque derivative bets nobody has a clue what the exposure is, because it's almost completely unregulated. Except that underlying derivative notional values are obscene, and could collapse a bank in a heartbeat.

Better reform would be to bring back Glass-Steagall and keep bail-in (let markets work), imo. Also, stay out of the big 5 banks (above). They've got huge exposure....
 
Quote from achilles28:

EU, US and Canada doing away with TBTF implicit-backstop. Bail-in's, re Cyprus, are the new model. Customer deposits over FDIC are open season, during bankruptcy. Every bank for itself.

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By the way, I am pretty certain that the G20 ( or maybe G19 now that Japan has started printing wildly) is orchestrating many of these "random" common policies. We have a world financial government by default and we don't control it. I have an uneasy feeling that it's all going to end badly for us.
 
Yup, there's an agenda. Doesn't exactly spell democracy or transparent Government, does it? More like, rule by the elite, behind closed doors.
 
Quote from achilles28:

Yup, there's an agenda. Doesn't exactly spell democracy or transparent Government, does it? More like, rule by the elite, behind closed doors.
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.... until it goes horribly wrong and then it will be our fault somehow!

I sometimes tell friends after discussing this subject, when they say what should we do: let's hope and pray that there really is a conspiracy - at least then we will have someone competent managing our affairs! We will get some spinoff benefits for sure then.

Some days I wonder if there really is intelligent life out there in society. (You, me and the great readers of ET excluded of course!)
 
Quote from achilles28:

...
In other news, C, BOA, GS, JPM and HSBC hold notional derivative positions valued at over 350 Trillion.... JPM is leveraged 30 to 1 against it's derivative book..... What could possibly go wrong? It's all "hedged"....
More...

350 Trillion in derivative positions for those 5 banks alone!??? I don't think so. Maybe a decimal point is in the wrong place. Don't believe everything you read, especially what you read on the internet.
 
Quote from piezoe:

350 Trillion in derivative positions for those 5 banks alone!??? I don't think so. Maybe a decimal point is in the wrong place. Don't believe everything you read, especially what you read on the internet.
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A look at the 2011 fourth quarter bank trading and derivatives activities report released by the U.S. Office of the Comptroller of the Currency (OCC) showed that the top five SIFIs — Bank of America, Citibank, Goldman Sachs, HSBC and JPMorgan — collectively accounted for more than 50 percent of the $700 trillion OTC derivatives trades worldwide in total notional value. JPMorgan alone accounted for more than $70 trillion of the $700 trillion, the report said. “That [$70 trillion] represents one-tenth of the global OTC derivatives exposures. This is what I call concentration of risk and what is defined as an institution that is too big to fail,” an industry official told Thomson Reuters on condition of anonymity.
http://blogs.reuters.com/financial-...volcker-rule-and-sifis-back-in-the-spotlight/
 
Quote from piezoe:

350 Trillion in derivative positions for those 5 banks alone!??? I don't think so. Maybe a decimal point is in the wrong place. Don't believe everything you read, especially what you read on the internet.
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well..if you read it from multiple credible sources such as Bloomberg,Reuters and so on-you better believe it.

that article published on seekingalpha while ago was spot on..

The U.S. is designing ways to wind down failing banks without unpopular measures such as the publicly funded $700 billion Troubled Asset Relief Program. The 2010 Dodd-Frank Act gives regulators tools to dismantle a large, distressed firm, and the Federal Reserve and Federal Deposit Insurance Corp. are considering whether banks should be told to issue long-term debt now that could be converted to equity in an emergency.
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achilles28 was right. It's every man for himself. specially people with deposits at the banks
 
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