- Fed Governor Stein Warns When A TBTF Bank Fails, Depositors Will Be Cyprus’ed!
by Tyler Durden, http://www.zerohedge.com/
Two months ago, Fed governor Jeremy Stein caused a major stir among the very serious excel-using economists and other wannabe “scientists”-cum-voodoo witchdoctors, when he hinted that it was the Fed’s actions that were leading to “overheating” in the markets. It took quite a bit of rhetoric by other very serious people to talk down his comments and give the impression that the S&P is not about 50% overvalued. Today, Stein has managed to stick his foot in his mouth for the second time in a row, and do what virtually nobody in the status quo is capable of: tell the truth.
In a speech titled “Regulating Large Financial Institutions” Stein made something very clear: if and when a TBTF fails, and since this time is not different, and a failure is only a matter of time, depositors will lose everything (courtesy of some $300 trillion in gross unnetted liabilities which once there is a counterparty chain failure, suddenly become very much net and immediately marginable – a drain of cash), which now that Cyprus is the template, is to be expected. Not only that but Stein makes it all too clear that part of the Dodd-Frank resolution authority guidelines, a bailout is no longer an option.