Chinese banking-system in slow-motion collapse as customers lose confidence after scandal.

[DetlefK]

Four major banks in the Henan province, all tied to the New Fortune investment-group, essentially defrauded their customers out of their money: If you put your money into your standard bank-account, it would instead be transfered to an investment-account in your name, except the money also didn't go there but directly to the bank-accounts of the share-holders.

One bank-executive has avoided arrest by chinese authorities and has fled the country with $6 billion customer-money. Wherabouts unknown. Presumably US.

As the money is totally gone, the chinese government cannot get the money back from the criminal. It would essentially have to bail out the bank-customers themselves for the money they lost.



These four banks, fresh out of money, simply shut down their online-banking to prevent people from withdrawing. ATMs were reprogrammed to produce error-messages if you tried to withdraw cash.

So, people travelled to the banks themselves, found their accounts frozen and started protesting in order to get attention from chinese politicians. Instead they got beaten up by plain-clothes security-forces that looked suspiciously like the thugs the chinese government sends in to beat up protesters.



Then the chinese government hacked the chinese COVID-warning-app and made it show protesters that they were at high risk of infection and should leave the area.



The outrage over this abuse of power reached a national fever-pitch and people began asking why the chinese government cannot simply reimburse the customers. After all: All banks are insured to the government against collapse, right?
Here comes the fine-print that these fraudulent bank-accounts weren't filed as regular deposit-accounts in the banks' systems. They were filed as investment-accounts and those are not insured.



Next step: The customers sued the bank for getting their money back.
The chinese court ruled that the bank is not at fault for the actions of criminal bank-employees.



FINALLY the chinese government issued a public statement... that people should read the fine-print on their banking-documents next time.



Somehow, this didn't produce confidence in the chinese banking-system and started a slow-motion collapse of chinese banks: Some people withdraw money from their bank-accounts, the bank get strapped for funds, people lose even more trust in the banks, even more people try to withdraw... and so forth.



FINALLY the chinese government stepped in... and reimbursed every defrauded customer with up to $7400.
"Your life-savings gone? Here's $7400."

[littlemissmartypants]

1. Thanks for sharing this, DetlefK. ❤