Philip Booth writes for City AM
Let’s deal with Vickers’ better proposals first. The chancellor would be right to implement bail-in procedures and depositor preference. It is essential to have a legal framework in which banks can be wound up without bringing down the rest of the financial system. It is difficult to see that being possible without banks’ bondholders having their capital turned into equity in the event of a bank failure. Furthermore, if depositors are to be insured, then taxpayers will end up bailing out bondholders unless their capital is clearly at risk before depositors start to lose money – this was the Irish experience.
Read rest of the article here.