The argument was that SOME bondholders, especially TBTFs, never get a haircut -- Goldman especially, as with Geithner's actions in the AIG fiasco in Sept. '08, where all were expecting a haircut but Geithner, as head of the NY Fed, insisted that Goldman, Deutsche Bank, and others be make 100% whole -- with money from the Fed backed with the authority of the US taxpayers. What would have happened to foreign banks had there been no US institutions at risk remains an open question, as does the question of what would have happened had Goldman not been involved. Perhaps the policy extends to JP Morgan and actually is one of protecting the banks that work with the Fed in open market operations and/or serve as bullion banks. At the time neither Goldman nor JP Morgan were depository banks nor were they covered by ANY depository guarantee. They were granted that status to enable them to receive TARP funds, IIRCC.

"It is not necessary to have hope in order to persevere."