Interestingly enough from a global financial stability point of view I actually like Co-Co bonds. Sure they are a shit investment for the individual investors but they are structured in a way that is very favorable to banks. If the capital ratio drops too much the bond obligations basically disappear and they get converted to common stock automatically and help recapitalize the bank. Its almost like a self bail out mechanism. Nobody wants to be the first to trigger them but once the first couple banks trigger the clause everyone else will pile in and use them to recapitalize. Now as with all things finance there could be contagion, and all sorts of unintended consequences but overall I actually think Co-Cos are not all that bad (for financial stability).