The difference between the bank failures of 2008 and today.
, a lot of people lost a lot of money — shareholders and some bondholders are zeroed out; senior executives are unceremoniously fired. Thebanks, on the other hand — UBS and First Citizens — both ended up with extraordinary gains on their balance sheets.This is the first banking crisis since the global financial crisis of 2008-09 — and it's easy to see what lessons have been learned.
First Citizens also managed to snag a $35 billion five-year loan from the FDIC at a concessional 3.5% interest rate.In 2008, none of the largest bank failures were resolved in this fashion. Lehman Brothers was allowed to file for a chaotic bankruptcy; JPMorgan was arm-twisted into buying Washington Mutual for a sum that kept bondholders intact; Royal Bank of Scotland was nationalized.
Such solutions did little to address festering problems that lasted for many years, and often cost billions of extra dollars before they were resolved.The financial crisis introduced the world to the idea that investor money — or “loss-absorbing capital” — should go to zero in the event of a banking crisis.
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