OK

This is only a Preview!

You must Publish this diary to make this visible to the public,
or click 'Edit Diary' to make further changes first.

Posting a Diary Entry

Daily Kos welcomes blog articles from readers, known as diaries. The Intro section to a diary should be about three paragraphs long, and is required. The body section is optional, as is the poll, which can have 1 to 15 choices. Descriptive tags are also required to help others find your diary by subject; please don't use "cute" tags.

When you're ready, scroll down below the tags and click Save & Preview. You can edit your diary after it's published by clicking Edit Diary. Polls cannot be edited once they are published.

If this is your first time creating a Diary since the Ajax upgrade, before you enter any text below, please press Ctrl-F5 and then hold down the Shift Key and press your browser's Reload button to refresh its cache with the new script files.

ATTENTION: READ THE RULES.

  1. One diary daily maximum.
  2. Substantive diaries only. If you don't have at least three solid, original paragraphs, you should probably post a comment in an Open Thread.
  3. No repetitive diaries. Take a moment to ensure your topic hasn't been blogged (you can search for Stories and Diaries that already cover this topic), though fresh original analysis is always welcome.
  4. Use the "Body" textbox if your diary entry is longer than three paragraphs.
  5. Any images in your posts must be hosted by an approved image hosting service (one of: imageshack.us, photobucket.com, flickr.com, smugmug.com, allyoucanupload.com, picturetrail.com, mac.com, webshots.com, editgrid.com).
  6. Copying and pasting entire copyrighted works is prohibited. If you do quote something, keep it brief, always provide a link to the original source, and use the <blockquote> tags to clearly identify the quoted material. Violating this rule is grounds for immediate banning.
  7. Be civil. Do not "call out" other users by name in diary titles. Do not use profanity in diary titles. Don't write diaries whose main purpose is to deliberately inflame.
For the complete list of DailyKos diary guidelines, please click here.

Please begin with an informative title:

ROME – Monte dei Paschi di Siena, Italy’s third-largest bank, plans to offer investors as much as 5 billion euros, or $6.9 billion, in new stock as it fights to avoid nationalization and braces for stress tests of its balance sheet by European regulators, the lender announced on Friday.
http://dealbook.nytimes.com/...

How old is this bank, by the way?

Monte dei Paschi, founded in 1472, is considered the world’s oldest bank.

Intro

You must enter an Intro for your Diary Entry between 300 and 1150 characters long (that's approximately 50-175 words without any html or formatting markup).

What is this bank's immediate problem?

Monte dei Paschi is facing a deadline imposed by the European Union to begin repaying €4.1 billion in bailout money this year. Failure to do so would mean that it must repay the interest in shares, effectively becoming nationalized.
It still hasn't repaid it's bailout funds - something all the big US banks did back in 2009.

So if it can't cough up the repayment the regulators (the EU in this case) will take back it's stake in the form of equity (stock) thus diluting it enough to become the principle owner.

Now, what would happen under Dodd-Frank?  Liquidation.  Barney Frank's "death panel for banks".

 

Title II, the Orderly Liquidation provision of the Dodd-Frank Act, provides a process to quickly and efficiently liquidate a large, complex financial company that is close to failing.  Title II provides an alternative to bankruptcy, in which the Federal Deposit Insurance Corporation (FDIC) is appointed as a receiver to carry out the liquidation and wind-up of the company.  The FDIC is given certain powers as receiver, and a three to five year time frame in which to finish the liquidation process. Title II is aimed at protecting the financial stability of the American economy, forcing shareholders and creditors to bear the losses of the failed financial company, removing management that was responsible for the financial condition of the company, and ensuring that payout to claimants is at least as much as the claimants would have received under a bankruptcy liquidation.  
http://www.law.cornell.edu/...

So, Citi recently failed its stress test.  Guess what they will do?   They will go find adequate capital to avoid the death penalty.

Who says we didn't get reform?

Extended (Optional)

EMAIL TO A FRIEND X
Your Email has been sent.