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> The government is likely to further push for mergers among banks to solve the problem because Beijing lacks a proper mechanism for banks to leave the market.

> The government is likely to further push for mergers among banks to solve the problem because Beijing lacks a proper mechanism for banks to leave the market. A forced merger exactly is the mechanism by which the US FDIC removes failing banks from the system. There's a sort of auction offered over the weekend to potential acquirers, with the FDIC subsidizing the deal if necessary, and shareholders of the acquired typically wiped out.

londons_explore 2y ago
I'd like to see a new class of company which does not allow bankruptcy, and shareholders are compelled to pay for any debts the company has to allow it to shut down or merge. It could be used for banks, insurance companies, and various other services the government deems required. In return for th added risk, shareholders could expect higher returns, or they could choose to insure their shares against the risk of them ending up with a negative value.
- 6510 2y ago
  I vaguely remember some coin offering by a Russian firm where they guaranteed to buy back some amount of coins per month at a fixed rate for some years (until non are left) where a different party offered the guarantee/insurance.
- refurb 2y ago
  How would they “expect higher returns”? And what insurance company would insure against business losses?
  - keiferski 2y ago
    They couldn’t. These sorts of socially engineered corporate ideas never make any market sense.
  - londons_explore 2y ago
    The higher returns would stem from the lower counterparty risk associated with every contract signed by the company.
    - refurb 2y ago
      The money would have to come from somewhere - premiums for customers? Those would be higher? And what lower counterparty risk? Now each investor is personally on the hook. Instead of walking away without their investment, now they are responsible for any loss. That’s higher risk.
- martindbp 2y ago
  And when the insurance companies fail due to heavy unforseen losses?
  - londons_explore 2y ago
    Then the shareholder is still liable - just like if you insure your house against fire, and a fire happens, but your insurance company goes bankrupt, and the reinsurer goes bankrupt, then it falls back to you to pay for a new house. Obviously such a thing I don't think has ever happened in modern times, but it's what would happen if all the insurers in the chain couldn't meet their obligations - the debt falls back to the insured person.
- JumpCrisscross 2y ago
  > a new class of company which does not allow bankruptcy, and shareholders are compelled to pay for any debts the company has to allow it to shut down or merge You’re describing a partnership. We had far more banking crises when banks were partnerships (and before deposit insurance).
- fakedang 2y ago
  > I'd like to see a new class of company which does not allow bankruptcy, and shareholders are compelled to pay for any debts the company has to allow it to shut down or merge. Look up Establishment companies in the Gulf Middle East then. If you've heard of stories of people being jailed for bankruptcy in the Gulf, most of the times, it is this. People set up Establishment companies because they are relatively cheaper and only need a local Arab to start up. Then when the companies end up in trouble, they get saddled with debt on an unlimited and personal liability basis, which causes them to be jailed, sometimes often with the Arab too. Usually the Arab's debts are wiped out by the government in annual amnesty programmes, but the foreigner is trapped till he pays or till the creditors write off the debt. Not to mention, there's always an LLC option present in all of these countries but quite a few folks cheap out and then get rekt.
  - scrubs 2y ago
    Right - capitalism in the the large is fine. In the small ie company by company, board member by member, control and accountability have become too divergent. That's a problem. Along the same lines I recently posted this idealized goal for our US companies: you can be regulated. And if you screw up financial fines and the like. Or you can be very lightly regulated. But if you screw up, criminal indictments, jail time, and personal liability. I'm guessing a ton of pro-capitalists who talk the talk on TV would prefer regulated entities ... that is you can't see a business man's real character unless there's skin in the game.

londons_explore 2y ago

I'd like to see a new class of company which does not allow bankruptcy, and shareholders are compelled to pay for any debts the company has to allow it to shut down or merge. It could be used for banks, insurance companies, and various other services the government deems required. In return for th added risk, shareholders could expect higher returns, or they could choose to insure their shares against the risk of them ending up with a negative value.

6510 2y ago
I vaguely remember some coin offering by a Russian firm where they guaranteed to buy back some amount of coins per month at a fixed rate for some years (until non are left) where a different party offered the guarantee/insurance.
refurb 2y ago
How would they “expect higher returns”? And what insurance company would insure against business losses?
- keiferski 2y ago
  They couldn’t. These sorts of socially engineered corporate ideas never make any market sense.
- londons_explore 2y ago
  The higher returns would stem from the lower counterparty risk associated with every contract signed by the company.
  - refurb 2y ago
    The money would have to come from somewhere - premiums for customers? Those would be higher? And what lower counterparty risk? Now each investor is personally on the hook. Instead of walking away without their investment, now they are responsible for any loss. That’s higher risk.
martindbp 2y ago
And when the insurance companies fail due to heavy unforseen losses?
- londons_explore 2y ago
  Then the shareholder is still liable - just like if you insure your house against fire, and a fire happens, but your insurance company goes bankrupt, and the reinsurer goes bankrupt, then it falls back to you to pay for a new house. Obviously such a thing I don't think has ever happened in modern times, but it's what would happen if all the insurers in the chain couldn't meet their obligations - the debt falls back to the insured person.
JumpCrisscross 2y ago
> a new class of company which does not allow bankruptcy, and shareholders are compelled to pay for any debts the company has to allow it to shut down or merge You’re describing a partnership. We had far more banking crises when banks were partnerships (and before deposit insurance).
fakedang 2y ago
> I'd like to see a new class of company which does not allow bankruptcy, and shareholders are compelled to pay for any debts the company has to allow it to shut down or merge. Look up Establishment companies in the Gulf Middle East then. If you've heard of stories of people being jailed for bankruptcy in the Gulf, most of the times, it is this. People set up Establishment companies because they are relatively cheaper and only need a local Arab to start up. Then when the companies end up in trouble, they get saddled with debt on an unlimited and personal liability basis, which causes them to be jailed, sometimes often with the Arab too. Usually the Arab's debts are wiped out by the government in annual amnesty programmes, but the foreigner is trapped till he pays or till the creditors write off the debt. Not to mention, there's always an LLC option present in all of these countries but quite a few folks cheap out and then get rekt.
- scrubs 2y ago
  Right - capitalism in the the large is fine. In the small ie company by company, board member by member, control and accountability have become too divergent. That's a problem. Along the same lines I recently posted this idealized goal for our US companies: you can be regulated. And if you screw up financial fines and the like. Or you can be very lightly regulated. But if you screw up, criminal indictments, jail time, and personal liability. I'm guessing a ton of pro-capitalists who talk the talk on TV would prefer regulated entities ... that is you can't see a business man's real character unless there's skin in the game.