5/30/2013

If bondholders are to suffer losses when a bank fails, they should know more about the company's balance sheet, Neil Unmack and Peter Thal Larsen write. The Committee for the Global Financial System has suggested a solution that involves improving lenders' transparency. "Banks will of course say disclosure can be dangerous," Unmack and Larsen write. "But unsecured bondholders will only accept the possibility of taking the pain in a bank failure if they can price their risk. More information is a must."

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