Comments: Bank Holiday in Cyprus

When You Weren't Looking, Democrat Bank Stooges Launch Bills to Permit Bailouts, Deregulate Derivatives
http://www.nakedcapitalism.com/2013/03/when-you-werent-looking-democrat-bank-stooges-launch-bills-to-permit-bailouts-deregulate-derivatives.html

In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren't even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders. Lehman had only two itty bitty banking subsidiaries, and to my knowledge, was not gathering retail deposits. But as readers may recall, Bank of America moved most of its derivatives from its Merrill Lynch operation its depositary in late 2011.

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and move of derivatives to FDIC insurance

US Deposits In Perspective: $25 Billion In Insurance, $9,283 Billion In Deposits; $297,514 Billion In Derivatives
http://www.zerohedge.com/news/2013-03-19/us-deposits-perspective-25-billion-insurance-9283-billion-deposits-297514-billion-de

other recent

Gaming the Cyprus Negotiations (Updated)
http://www.nakedcapitalism.com/2013/03/gaming-the-cyprus-negotiations.html
Will Cyprus Become Creditanstalt 2.0?
http://www.nakedcapitalism.com/2013/03/will-cyprus-become-creditanstalt-2-0.html
Cyprus: The Next Blunder
http://www.nakedcapitalism.com/2013/03/cyprus-the-next-blunder.html

Posted by Lynn Wheeler at March 19, 2013 11:11 AM
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