Deposits might rank pari passu with bonds when it comes to sharing losses

Which Depositors Should Suffer Losses When a Bank Fails?

As the Europeans busily discuss how to provide bailouts from the "European Stability Mechanism" directly to banks, Jyrki Katainen, the prime minister of Finland (a country whose government has triple-A bond ratings), has asserted that the "mind-set" must be changed "from bail-out to bail-in."

When it comes to sharing in the losses of failing banks, Katainen asserts, in particular, that shareholders and bondholders should take losses – absolutely right — and that "only in rare, exceptional occasions, public money should be used" —again right, although the historical record demonstrates that such occasions are not a rare as one might hope.

But Katainen did not mention depositors. 

What about them?
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