You can't lose what you no longer have

I have explained often enough that the banks can only be fixed via debt-for-equity swaps (and not by throwing good taxpayers' money after bad aka 'bail out'), whether explicit or implicit, e.g. here.

Detractors say that this would be robbing bondholders, which is nonsense of course - it's a free market solution. You've got to remember that bondholders have already lost a lot of money via the lousy investment decisions of the banks that raised money this way. As ever, 'the markets' have already predicted the likely losses to date, as the FT explains:

The selling pressure [on bank bonds] began to increase late last week as bank stocks started to tumble, but it was not until Tuesday’s meeting between banks, investors, the Treasury, the Bank of England and the Financial Services Authority failed to produce any guidance that the rout really got under way.

Tier one bonds from Royal Bank of Scotland have been hardest hit, falling to less than 10 pence in the pound, but most other UK banks’ outstanding tier one notes now trade at well below half their face value. Most worrying for the market was the performance of the new Lloyds tier one, which began trading on Monday at face value of 100p and have already dropped to just 52p in the pound for the sterling issue with the shortest potential maturity.

OK, 'Tier one' is a technical term for those bonds that rank second-to-last in the order of priority of repayment, just above share capital, but a debt-for-equity swap that gave them shares worth 10p or 52p in the £1 respectively would merely be recognising market realities.