Make the depositors who were bailed out contribute to the retrospective guarantee?

[jman0war]

6. If taxing depositors had been a better solution than what the government actually did, then I would be happy for the governents to take 10% rather than the mess we are in (and yes I have deposits in Irish banks).

But why should anyone have confidence that 10% is the final amount and not just round 1?

In our scenario, the real amount we taxpayers were on the hook for, was wildly under estimated.

 

[Chris]

5. Even though banks are private enterprises they do not follow the rules of a capitalist society. Meaning that governments will try and not let them fail, and that their failure costs all of taxpayers and that banks should be tightly regulated. And that basically if you let bankers act freely they are no better than those who daily go into Paddy Power.

I agree that the entire financial industry has nothing to do with capitalism. Capitalism is about profit AND loss, and when you take away the loss the cost to the taxpayer becomes ever larger. So you have a situation where banks behave in a certain way because they do have the same fear of losses as pretty much all other industries.
But the solution is not to add another wrong to the equation, but rather to remove the source of the problem, which is the protection from losses in the first place.

 

[galwegian44]

Shocked again to read the original post in this thread, especially in light of what's happened in Cyprus.

The issue that our government (or Europe) have not addressed is to put measures in place to ensure this never happens again. I never want to hear the expression "bank too big to fail" or "banking sector that dwarfs a country's GDP" again. But what is being done - nothing I fear.

We need to put regulations in place to diminish the size of the banks and to discourage growth beyond a certain size. Tie this into a Deposit Insurance scheme that should be set up (like FDIC in USA) where the banks would pay more deposit insurance to offset the implicit/non-voluntary guarantees they get from taxpayers (through the government) to cover losses beyond the ability of the scheme to cover.

Capital requirements for banks in Europe need to be increased also and as far as I'm aware this has not even been discussed in recent times. Whatever about paying for this crisis once, who wants to be in the hot seat again sometime in the future.