The Bank Bail-In Swindle Begins

[marmar]

Posted on December 29, 2015 by Ellen Brown

While the mainstream media focus on ISIS extremists, a threat that has gone virtually unreported is that your life savings could be wiped out in a massive derivatives collapse. Bank bail-ins have begun in Europe, and the infrastructure is in place in the US. Poverty also kills.

At the end of November, an Italian pensioner hanged himself after his entire €100,000 savings were confiscated in a bank “rescue” scheme. He left a suicide note blaming the bank, where he had been a customer for 50 years and had invested in bank-issued bonds. But he might better have blamed the EU and the G20’s Financial Stability Board, which have imposed an “Orderly Resolution” regime that keeps insolvent banks afloat by confiscating the savings of investors and depositors. Some 130,000 shareholders and junior bond holders suffered losses in the “rescue.”

The pensioner’s bank was one of four small regional banks that had been put under special administration over the past two years. The €3.6 billion ($3.83 billion) rescue plan launched by the Italian government uses a newly-formed National Resolution Fund, which is fed by the country’s healthy banks. But before the fund can be tapped, losses must be imposed on investors; and in January, EU rules will require that they also be imposed on depositors. According to a December 10th article on BBC.com:

"e is. In a November 30th article titled “Why I’m Closing My Bank Accounts While I Still Can,” he writes:
(It is) entirely possible in the next banking crisis that depositors in giant too-big-to-fail failing banks could have their money confiscated and turned into equity shares. . . .

If your too-big-to-fail (TBTF) bank is failing because they can’t pay off derivative bets they made, and the government refuses to bail them out, under a mandate titled “Adequacy of Loss-Absorbing Capacity of Global Systemically Important Banks in Resolution,” approved on Nov. 16, 2014, by the G20’s Financial Stability Board, they can take your deposited money and turn it into shares of equity capital to try and keep your TBTF bank from failing.

Once your money is deposited in the bank, it legally becomes the property of the bank. Gilani explains:

"Your deposited cash is an unsecured debt obligation of your bank. It owes you that money back.

If you bank with one of the country’s biggest banks, who collectively have trillions of dollars of derivatives they hold “off balance sheet” (meaning those debts aren’t recorded on banks’ GAAP balance sheets), those debt bets have a superior legal standing to your deposits and get paid back before you get any of your cash.

. . . Big banks got that language inserted into the 2010 Dodd-Frank law meant to rein in dangerous bank behavior.

.....(snip).....

Propping Up the Derivatives Scheme

Dodd-Frank states in its preamble that it will “protect the American taxpayer by ending bailouts.” But it does this under Title II by imposing the losses of insolvent financial companies on their common and preferred stockholders, debtholders, and other unsecured creditors. That includes depositors, the largest class of unsecured creditor of any bank. ............(more)

http://ellenbrown.com/2015/12/29/a-crisis-worse-than-isis-bail-ins-begin/

[annabanana]

1. Doesn't the FDIC keep this from happening here? At least up to

the first $250k?

[SusanCalvin]

2. Would that apply if they converted it to stock?

Since you would theoretically still have your money, at least until it crashed?

[ToxMarz]

6. I believe the FDIC protection still applies

But it is only to the extent the FDIC can pay. The FDIC fund is in the billions, the banks potential losses are in the trillions. Had the banks been allowed to fail in the last crash, FDIC likely could not have covered the losses.

[dixiegrrrrl]

7. The FDIC depends on banks to pay premiums into the FDIC, which they have not been doing.

Plus, when the FDIC pay creditors, it pays them in different ways.
Small depositors are NOT at the top of that list.

When FDIC does pay, it can be years down the road.
If they do not run out of money first.
Which they will, since the FED gave the big banks permission to put all their derivative bets under FDIC protection.

One of the several reasons I only keep enough money in teh bank that I can afford to lose.
Me and a million more other folks.

[Punx]

8. It's been a long time since

I was in banking, but this is one of my questions as well.

My understanding is that there is flexibility in how the FDIC can make you whole. In a full blow disaster perhaps they might say your first $5-10k is available, but then for the rest they might spread out reimbursement over a long period of time, or bail in?

I know that the FDIC/Bank Regulators were not happy several years ago when BofA moved there derivatives business in with their retail (me/you) business. I've lost track of what happened with that fight, but I'm pretty sure someone told the Feds to lay off at some point.

One positive thing that did happen during the last crisis (2008-09) is that the FDIC (US Government) did put an unlimited guarantee on business checking accounts. Without that a lot of businesses big or relatively small would have had trouble running their operations if they tried to keep checking accounts around 250k. Fortunately it wasn't tested at the too big to fail level.

In the end though it's us, the US Taxpayers who are on the hook for the banks gambling debts, one way or another. A great example of privatize the profits, and socialize the losses and how the game is rigged against the average, and even not so average person. I'd love to see senior management's assets be on the line in a bank failure, but that's NOT GOING TO HAPPEN!

IF you are fortunate enough to have a fair amount of cash savings, my recommendation is to put it in a credit union. More than one if you have the time and wherewithal. They are under attack also. Commercial banks hate them. I remember the CEO of US Bank whining about how unfair it was to have to compete with them since they didn't have to make a profit.

[Scuba]

3. Would that be the Dodd-Frank bill that Hillary feels is adequate to protect ...

... her donors?

[tazkcmo]

4. Americans are silly

Rail against big banks then get a cc, mortgage, car loan, checking acct, etc, from the big banks.

[Victor_c3]

11. I have to agree with you on that

I personally do all my banking with a local credit union precisely for that reason.

If people are angry with big banks then they have to stop using them!

[Baitball Blogger]

5. Why don't we just say the truth.

The bank's recklessness at protecting our investments has proven to be a national security problem. When ordinary people can't sock away enough for retirement or their kid's college education, bad things happen. Many of them move to the dark side to try to make up for the loss. In this age of small government, we have an incredible problem with corrupt community leaders who have learned how to profit from their positions in the community. Their greed and selfishness is destroying the rest of the American dream for the people they are supposed to represent. Trust in the private-public alliances are gone forever. And, when you have a lack of unity among Americans, we end up with the fragmentation problem that we're dealing with today.

THAT's the trickle down effect of having a deregulated banking industry.

[mountain grammy]

9. Well said!

[JDPriestly]

13. +1000

[Victor_c3]

10. Wouldn't your money be safer in a credit union then?

I believe that there is a difference in how money is invested / worked by a credit union and a bank.

I'm really kind of ignorant on these sorts of things though...

Anyone know anything about this?

[Doctor_J]

12. They should "cut it out"

according to one candidate, or be broken up before this can happen, according to a different candidate.