Thursday, 20 June 2013
Making depositors take a haircut when a bank fails.
Nowadays it is sacrilege to suggest that depositors should take a hair cut when a bank fails: witness the rumpus in Cyprus a few months ago.
But it seems that it was generally accepted quite recently – in the early 1990s – that depositors SHOULD TAKE a hair cut when a bank fails. See this FT article – para starting “Sir Mervyn agrees…”. See here, or here or here.