I've lived through quite a few financial crises, some local to Australia, and others global. Invariably, the first failures are those of obvious shonks (Australianism?) who would probably have failed anyway. Then there are seemingly reputable institutions that turn out to have been shonky. Then there are institutions that played by the rules, but it turns out the rules weren't good enough. After that, no one is safe and the government steps in to bail the bankers out.Of course, ordinary people pay the bill.
Re: Common equity having seniority over bond holders
It's in the contracts.
I don't know why my entry appeared twice, but apparently I cannot just delete the copy :(