ECB moving to force losses on senior bondholders in Spanish banks?

[PaddyJoe]

This is a very interesting development if true. Apparently Mario Draghi advocated the move at last Monday's EU finance minsters' summit.
Can't wait to hear what Noonan has to say about this report that originated with the WSJ.

LONDON (ShareCast) - Even though the European Central Bank (ECB) opposed forcing losses on senior bondholders in the 2010 bailout of Irish banks, its President, Mario Draghi, has changed the ECB's stance and now looks to have these investors share the burden of the Spanish bank rescue. According to The Wall Street Journal (WSJ), Draghi apparently clashed with Eurozone finance ministers opposed to the measure at the July 9th meeting. The opposition argues that taking this step would harm access to credit markets. Currently the agreement with Madrid only forces losses on bank shareholders and junior bondholders. Apparently Draghi is now arguing for senior creditors to be held accountable when a bank is pushed into liquidation. In other words, according to WSJ, they would remain safe if the larger banks merely underwent restructuring.

http://uk.finance.yahoo.com/news/ecb...092509536.html

[C. Flower]

Discussed a bit here -

http://www.politicalworld.org/showpo...5&postcount=39

I have a feeling that very few Spanish banks would be liquidated and zombie banks in the style of Anglo are what is intended.

[ang]

Its telling that finance ministers across Europe prefer the taxpayer to carry the burden of failed bets rather than the bondholder gamblers who invested in these zombie banks and continue to trade these very bets on secondary markets.

[riposte]

Listening to Sean Whelan discussing this on RTE News at One ..... he said the attitude in response to Draghi was " Ireland got it wrong ..... the precedence is set ..... so now everyone else must get it wrong also."

[C. Flower]

Its telling that finance ministers across Europe prefer the taxpayer to carry the burden of failed bets rather than the bondholder gamblers who invested in these zombie banks and continue to trade these very bets on secondary markets.

At the back of it all, Geithner, the big US gun, holding CDS in one hand, and a heat seeking missile launcher in the other.

http://www.thecorner.eu/2012/01/geit...overeign-debt/

[ang]

At the back of it all, Geithner, the big US gun, holding CDS in one hand, and a heat seeking missile launcher in the other.

http://www.thecorner.eu/2012/01/geit...overeign-debt/

Ah yes Timothy and that grenade, well Timothy has bigger problems at home to think about now as it becomes clearer that his own financial establishments are wearing no clothes.

That EU bail-in tool comes into being 2018 whether its liked or not. It may well have to be brought forward to appease the Germans and this time Timothy will be left holding his own grenade. The tone from the EU regarding American intervention in the financial crisis has become somewhat hostile of late........

[C. Flower]

Ah yes Timothy and that grenade, well Timothy has bigger problems at home to think about now as it becomes clearer that his own financial establishments are wearing no clothes.

That EU bail-in tool comes into being 2018 whether its liked or not. It may well have to be brought forward to appease the Germans and this time Timothy will be left holding his own grenade. The tone from the EU regarding American intervention in the financial crisis has become somewhat hostile of late........

The article I linked mentioned pressures from Geithner on the Greek haircut arrangements.

He does not want us to have the world "CDS trigger" stamped on our foreheads.

[ang]

The article I linked mentioned pressures from Geithner on the Greek haircut arrangements.

He does not want us to have the world "CDS trigger" stamped on our foreheads.

It does indeed but the Greek haircuts (all be it slimmed down) went ahead and the trigger didn't get pulled

A lot of fancy financial footsteps ensued but Geithner had to play ball in the end.

He is now very busy trying to detach himself from the libor debacle.

Can teflon be scratched if abused ?

[PaddyJoe]

Noonan to meet Draghi in Frankfurt tomorrow, to discuss “the ongoing sustainability of the Irish financial system", according to a Finance spokesperson.

A shift in position by the ECB raises the question of possible changes to Ireland’s EU-International Monetary Fund bailout deal, as requests by Irish Finance Minister Michael Noonan to the ECB to be allowed to write down senior bank debt were repeatedly rebuffed by former president Jean-Claude Trichet, who left office in October.
Noonan said on June 19 that the ECB’s stance had “hardened” since last year. “We’ll see how things play out in the future,” he said.

http://www.bloomberg.com/news/2012-0...ndholders.html

[ang]

Sinn Fein have released a statement on this saying this u-turn in ECB policy is significant if true and is exactly what they (SF) have been calling for. They are also asking Michael Noonan to release a statement to clarify the position -

“In recent months many key international players, including the OECD, the IMF and the European Commission have been coming round to Sinn Féin's view. Now it appears even the ECB accepts the logic of our argument.

“The Minister for Finance Michael Noonan was at the meeting last week at which Mario Draghi gave his briefing on the Spanish banking crisis. The minister should publically confirm whether the ECB has changed its tune. He should also outline his response to these developments.

http://www.sinnfein.ie/contents/23812

[C. Flower]

It does indeed but the Greek haircuts (all be it slimmed down) went ahead and the trigger didn't get pulled

A lot of fancy financial footsteps ensued but Geithner had to play ball in the end.

He is now very busy trying to detach himself from the libor debacle.

Can teflon be scratched if abused ?

Someone wiser and better informed than me might confirm that the Greeks are in reality still on the hook for the supposedly burned debt? That was certainly my impression when I read the Greek deal.

[Count Bobulescu]

11th hour boost for Ireland?

“If the reports are true, it would strengthen very much the hand of the Irish government in re-negotiating the historic banking debt because Irish banks were recapitalized so that senior bank holders were repaid in full,” Michael McGrath, spokesman for the Fianna Fail opposition party, said.

In the past, Irish government ministers have bitterly complained that Irish taxpayers have had to bear the huge costs of saving even “dead” private banks, because the ECB insisted that senior bank bond holders be repaid in full to help stop contagion in the rest of the euro zone.

http://blogs.wsj.com/eurocrisis/2012...-banking-debt/

[MPB]

I don,t think people are understanding this shift in policy fully.

We are the Senior Bondholders in Irish Banks.

[ang]

Someone wiser and better informed than me might confirm that the Greeks are in reality still on the hook for the supposedly burned debt? That was certainly my impression when I read the Greek deal.

Cass Greeks are still on the hook for a lot of the bonds swapped but there was approx €100BN of a writedown with debt swaps and new bonds issue etc. which included a % of burning and long term bond extensions. This did not make any difference to the Greek people and as I said a lot of fancy footwork ensued but in terms of market writedowns it happened and Geithner did not get it done exactly the way he wanted.

It turned out to be a better fudge than some fudges.

[C. Flower]

Is there a Santa Claus? Namawinelake says "like ******* there is"

http://namawinelake.wordpress.com/20...n-bondholders/