The Depositor Haircut

A more human look at the devastating effect of the Cypriot bank bailout. Over-reliance on flaky investments to provide unsustainable returns, poor oversight and transparency, resulting in many people losing their life savings.
        
“One member of Papaconstantinou’s group used €800,000 he had on deposit in the bank to get a €500,000 loan to buy a house in Britain, so as to be closer to his children. Before the deal went through, the crisis broke. When the dust settled, instead of having €800,000 in ready cash and a mortgage on a house worth half a million, he found his €800,000 reduced to €100,000, and the whole loan still to pay back – a net debt of €400,000.”

LRB · James Meek · The Depositor Haircut

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