So why have our governments suddenly chosen to pretend (contradicting their own, earlier laws) that "bank shareholders" and "bank depositors" are now essentially two peas in a pod? Why are bank depositors getting 0% of the "gain" of being a shareholder, but 100% of the pain when it comes to stealing their wealth?
This becomes simple to understand the moment one proposes financing these "bail-ins" 100% through shareholder equity (as it should be). What would be the unanimous response of the gambling, thieving bankers and the lying politicians?
"There isn't nearly enough shareholder equity we can squeeze out of these fraud-factories to come close to funding any bail-in." Presumably the bankers and politicians would use somewhat different language to communicate this point.
What does it mean when the "equity" of a bank is absurdly inadequate when it comes to even partially financing a "restructuring?" It means that we are not dealing merely with some moderately insolvent institution, but a hopelessly bankrupt entity. We are dealing with banks which are so completely/obviously bankrupt that they only way they can temporarily delay immediate bankruptcy is by stealing large amounts of money from victims who should never be legally exposed to any risk in these circumstances.The mere suggestion in any such scenario that bank depositors would/should/could be part of any "bail-in" is conclusive proof that the bank involved is so obviously bankrupt that it must immediately be put out of its (our) misery. To borrow Monty Python vernacular, it is the proverbial dead parrot. However, let me play devil's advocate. Let me assume that during my three years in law school that I missed some legal "justification" for stealing from savers to indemnify the losses of gamblers. Let me assume that "Too Big To Fail" is not just a euphemism for allowing a financial crime syndicate to blackmail entire societies into permanently indemnifying all of their gambling losses, but rather is actually legitimate public policy. How could the Cyprus Steal have been perpetrated in at least a slightly less-offensive and blatantly-criminal manner? If you're going to suddenly start treating bank depositors like "shareholders," then obviously you need to give them some shares. New shares, dollar-for-dollar for every dollar of their savings which has been "converted to equity."