such depositor did not have actual knowledge of the suspension of insurance.
The insured deposits of each depositor in such depository institution on the effective date of the order issued under this paragraph, minus all subsequent withdrawals from any deposits of such depositor, shall continue to be insured, subject to the administrative proceedings as provided in this chapter.
Faced with a near collapse they are far more likely to give banks' creditors a guarantee than to hurt them.What may be needed is a rejigging of banks' balance-sheets to try to contain this panic, with a clearer line between those who bear losses, including shareholders and junior creditors, and those, such as depositors, senior creditors and counterparties, who can be assured of business as usual.
BankBoston is largely in the business of lending money at long term--say, 30-year mortgages--yet it offers depositors such as me, who supply that money, the right to withdraw it any time we like.
Some 72percentt of its balance sheet of 992 billion euros was funded by capital providers such as retail depositors, who are likely to be the least flighty, as of the end of June.
John Varley, chief executive of Barclays, told the Commission on Banking meeting this week, "it is possible that free-if-in-credit banking is a structure that has outlived its time" and that such services to depositors are "idiosyncratic".
According to the Economist, the Cypriot resolution policy was "unfair, short-sighted and self-defeating". A Wall Street Journal account decried the policy as "radical surgery," such that "large depositors in Cyprus's two big, internationally active banks absorb steep losses". Well, someone must bear these losses.
So, the logic goes, depositors such as yourself can teach them a lesson about responsibility by moving funds to smaller banks.
The order also prohibits him from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter.
This neglects the markup of banks in this case, but it is difficult to estimate such a markup when depositors get a negative return.
