Sharing the pain

摘要

Even as America's politicians harangue the bankers, the bankers are sniping back. On March 13th the chairman of Wells Fargo, America's fourth-biggest bank, called the Treasury's ongoing stress test for banks, with its glacial timetable, "asinine". Amid the ranting, the rot from bad debts is creeping up banks' capital structures, imperilling any recovery. Initially common shareholders, who bear the "first loss" on assets, were crushed, along with preferred shareholders, who get supposedly safer dividends. Now owners of bank debt, which bears losses once equity is wiped out, live in fear. Junior subordinated debt, which ranks next in the queue, trades at 15-45 cents on the dollar and senior subordinated debt at 65-70 cents. Even senior debt, holders of which rank second only to depositors in America and typically alongside them in Europe, is at 85-90 cents.