Bail-in Legislation

>>1837436
It's already law in a lot of places, btw, and generally there are exceptions for small-time private account-holders. The EU bank resolution directive (2014/59/EU) for instance excempts (among other things) collateralized debt, trustee money, salaries and any protected/guaranteed deposits (up to 100k for private individuals in the EU). They obviously don't want to go after your granny's savings account.

I think the main thrust is not taking money from deposits, but going after bond owners, typically the large insitiutional investors holding hundreds of millions in bonds, and subjecting them to a haircut or converting the debt they hold to equity. Several of the failed banks post-2008 showed the same pattern: As they announced the troubles, their bonds obviously tanked, because of the very imminent default risk. Then big high-risk funds swooped in and bought up billions in debt for a bargain (knowing full well this was a high-risk investment). When the governments finally stepped in and saved the banks, they started suing for full repayment and interest based on the bonds they owned.

It created a lot of political outrage and was seen as unfair by many. Why should the tax payer be held liable for the massive profits of high-risk speculative investors? So for the future they want people taking on higher risks to also shoulder a higher burden during the resolution of the bank. It's a countermeasure, since the actions post-2008 would otherwise indicate that "too big to fail" would equal "risk free investment", since the public will have to step in no matter what. A bail-in tries to bring back market-forces to securities issued by large banks.

>>1837518
Large banks obviously hate it, because it tanks their credit rating since for the first time in a long while their creditors actually have to somewhat fear a default.

Partly to prevent this legislation and partly to alleviate the impact, they created their own little bail-in system with co-co bonds. Also shows that there was a need for bail-in, but without the threat of legislations I doubt many banks would have cared.