Talk:Senior debt

Better links to Junior debt

This page needs to be integrated with the Junior debt page. Finnancier (talk) 06:49, 6 February 2008 (UTC)

Page move

This page has been moved from Senior note. Ronnotel (talk) 12:58, 6 February 2008 (UTC)

Bank seizures

I significantly recast the section formerly entitled Unsecured senior bank debt not always effectively senior, which read as follows:

As mentioned above, secured lenders are in a better position because they have first claim to assets, and can then rely on the senior debt rankings.

However, in some countries, such as the United States, there is also a unique characteristic of unsecured "senior" bank debt in that it can be junior to FDIC deposits (whether at the bank level or the holding company level). The collapse of Washington Mutual bank in 2008 highlighted this priority of claim as the FDIC said it would take no losses while WaMu's senior debt was trading at $0.20 to $0.25 on the dollar on the day it was closed. In the WaMu collapse, even the pay of executive deferred pay accounts were fully honored by JP Morgan (who assumed most of the assets and deposits of WaMu), which meant even WaMu executive bonuses that had not yet been paid ultimately ranked higher than the senior debt holders (who now expect little recovery).

This section hints that senior debt owed by the banks themselves were not treated as senior, but the articles cited give examples only of the holding company debt being treated this way. While the opco debt may have been disavowed, I have not seen any evidence of this.

Moreover, the case of a bank seizure would merit a considerably more nuanced discussion, even if it's true. In almost all jurisdictions there are various preferences in law that take precedence over contractual arrangements (and seniority is a matter of contractual arrangement).

Bongomatic (talk) 16:50, 2 November 2008 (UTC)

Both Hold Co and Bank senior debt was treated similarly. The key to the whole thing is that the FDIC used its powers to save itself at the expense of these debt holders. That is the key element, which you have now removed. I have no personal beef in the issue -- I'm just an observer, so I'm not too concerned with how it gets presented, but I think we are missing the interesting parts now. Deet (talk) 21:22, 2 November 2008 (UTC)

Where is the reference for this proposition? It's not in the articles cited (there is one hint, but nothing explicit). Bongomatic (talk) 02:36, 7 November 2008 (UTC)

here Deet (talk) 02:48, 7 November 2008 (UTC)

Here is an interesting post which is a self-admitted biased rant; however, this guy does have a point. It was remarkable what the FDIC did in this case. I know we can't quote it, and I'm not suggesting that, but it does provide some more colour (accurate colour from what I understand). Deet (talk) 01:21, 3 November 2008 (UTC)

References