So much for Cyprus being a "one-off."
On Wednesday, Bruno Waterfield at the UK Telegraph relayed that "Jeroen Dijsselbloem, the Dutch chairman of the eurozone, told the FT and Reuters that the heavy losses inflicted on depositors in Cyprus would be the template for future banking crises across Europe." That's "would," not "could." The Associated Press hasn't had the nerve to correctly characterize what Dijsselbloem said, and now Reuters itself has gotten cold feet.
Here is what Dijsselbloem said according to the original stories at the Financial Times and Reuters (bolds are mine throughout this post):
Financial Times -- "Cyprus rescue signals new line on bailouts"
“If we want to have a healthy, sound financial sector, the only way is to say: ‘Look, where you take the risks, you must deal with them, and if you can’t deal with them you shouldn’t have taken them on and the consequence might be that it is end of story’,” he added. “That’s an approach that I think we, now that we are out of the heat of the crisis, should consequently take.”
Reuters -- "After Cyprus, eurozone faces tough bank regime - Eurogroup head"
A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors, the head of the region's finance ministers said.
"What we've done last night is what I call pushing back the risks," Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, told Reuters and the Financial Times hours after the Cyprus deal was struck.
"If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'. If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders," he said.
Juergen Bates at the Associated Press watered down what Dijsselbloem said:
The move was hailed later that day by Jeroen Dijsselbloem, the head of the Eurogroup of euro finance ministers, who said that forcing losses on banks' shareholders, bondholders and even large depositors could become the template for future rescues.
Michele Kambas at Reuters also understated what Dijsselbloem clearly stated:
But policymakers are divided, and the waters were muddied a day after the deal was inked when the Dutch chair of the euro zone's finance ministers, Jeroen Dijsselbloem, said it could serve as a model for future crises.Faced with a market backlash, Dijsselbloem rowed back.
Sorry, Juergen and Michele, there was no "maybe" element in what Dijsselbloem said before someone reined him in.
Bates and Kambas seem far more interested in preventing the public from fully understanding how determined EU leaders are to go after depositors' accounts any time it's deemed necessary than they are in accurately communicating the truth.
Meanwhile, Reuters is now reporting that uninsured depositors in one Cypriot bank will not get cash back at all, but instead will be forced to take stock in the bank theoretically worth about 37.5% of the value of their deposits.
Cross-posted at BizzyBlog.com.
