Surviving A Bank Bail-In
9/24/13, by Greg Nguyen
How Your Bank Deposits And Pensions Are At Risk
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2008 Financial Crisis: Bank Bail-Out
Fed bailed out banks, preventing a collapse of global financial system.
Federal Reserve Bank is the US Central Bank, but is not a federal agency.
Fed is a private corporation, with European and US commercial banks as shareholders.
Fed bailout of TBTF banks = US taxpayers left holding the bag.
Bailout was a big Ponzi scheme robbing taxpayers.
Financial Crisis 2.0: Bank Bail-In
Due to bail-out fatigue, taxpayers are tapped out.
New laws enacted to prevent banking collapse.
Instead of using taxpayer funds, use creditor funds to bail-out banks, incl. depositor funds!
Deposits used to recapitalize failing banks!
This is outright theft.
However, it is legalized theft, as banking laws were put in place in 2011.
The Anatomy Of A Bail-In
When you put money in your deposit account, it is no longer yours!
It is now on the bank’s balance sheet.
Therefore, it becomes the property of the bank.
You are now an unsecured creditor of the bank.
As an “investor” in the bank, if the bank fails, you lose your money.
But What About The FDIC?
FDIC guarantees up to $250K per bank.
Anything above that limit, and you will lose most or all of that money.
Under the $250K threshold, your funds are secured to the extent the FDIC can cover it.
Which begs the question: How Secure is the FDIC itself?
How Secure Is The FDIC?
In 2009, FDIC was - $8.2 billion.
Due to extraordinary replenishing, FDIC has $33 billion in deposit insurance fund.
But total deposits are $8 trillion.
For every $100 in deposits, there are only 41 cents insuring those deposits.
FDIC fund covers 0.41% of deposits.
Mandate is 1.15%--still ridiculously low.
Fractional reserve banking is the problem.
What Will Financial Crisis 2.0 Look Like?
A run on banks will cascade throughout the global banking system--they’re interconnected.
A bail-in will be implemented, as deposits will be confiscated and/or taxed.
Taxpayers and federal governments will be spared, but deposits, pensions and insurance funds will be raided.
Priority Of Creditors In Recapitalizing Failed Banks
Bankruptcy Reform Act of 2005.
Credit derivatives holders have highest priority.
Problem: derivatives are what caused 2008 Financial Crisis and will cause next crisis.
Depositors are near the bottom and get paid last under bank receivership.
In other words, if your bank fails, STAND IN LINE--and good luck on recovering your $!
Bail-In Laws Are Already In Place
BIS endorsed bail-ins at G-20 Summit in 2011.
BIS is “Central Bank” of central banks.
Bail-in occurred in Cyprus already and will occur in other Euro countries soon.
Canada, New Zealand, Australia, UK, Euro, and US (Dodd-Frank) have already enacted bail-in laws.
Systemic risk is pronounced as banks lend to each other.
Investments, Pensions, Insurance, And Government Accounts At Risk
Pension funds and insurance carriers invest in unsecured bank debt.
State and local governments are big depositors.
Brokerage firms hold their money overnight in TBTF banks.
Tens of trillions of dollars will dissipate in the event of a systemic banking crisis.
Note: notional value of derivatives is north of $1.2 quadrillion, or $1,200,000,000,000,000.
What Should YOU Do?
Pray I am wrong.
Realize all accounts are at risk in the event of a bail-in.
Explore custody arrangements.
"Large financial institutions still have way too much leverage." - Sheila Bair, former FDIC Chairwoman, September 15, 2013
http://www.huffingtonpost.com/ellen-brown/bailout-is-out-bailin-is-_b_3178702.html