Ben’s Preface:
I’ve been warning people for over 35 years to not trust banks to safeguard their money. I can’t understand why people think that banks are safe when the banking business is known to be the biggest criminal enterprise in the world. Yet, Americans trust bankers, above all other options, to keep their money safe. It is insanity. Not to mention that the bank industry and its usury has destroyed America. The smart folks have sought out other alternatives to keep their money and valuables safe.
The article below explains that money deposited in a bank becomes property of the bank. It is no longer property of the depositor. The depositor is left with a deposit slip that amounts to an unsecured IOU, and the banker can use the deposited money for whatever he desires. So if the bank invests the money in a dodgy trade on Wall Street (which they do all the time) and loses the investment, the depositor’s deposit is gone.
Bankers are notorious for making bad investments with other people’s money. That is what caused the great bank panic in 2008 when the bankers lost trillions of dollars in bad trades, and the US Treasury bailed them out. Bad investments by bankers also caused the current bank panic in Cyprus. The Cyprus banks proved to the world that they can confiscate bank deposits. They claim the right to legally steal up to 60% of some deposits.
Lars Christensen, the CEO of Saxo Bank, in a recent blog post, chastised the thievery of the IMF and the EU with the following statement.
This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver. Although the representatives at the bailout press conference tried to present this as a one-off, they were not willing to rule out similar measures elsewhere — not that it would have mattered much as the trust is gone anyway. It is now difficult to expect any kind of limitation to what measures the Troika and EU might take when the crisis really starts to bite.
If you can do this once, you can do it again. if you can confiscate 10 percent of a bank customer’s money, you can confiscate 25, 50 or even 100 percent. I now believe we will see worse as the panic increases, with politicians desperately trying to keep the EUR alive.
Depositors in other prospective bailout countries must be running scared — is it safe to keep money in an Italian, Spanish or Greek bank any more? “I don’t know,” must be the answer. Is it prudent to take the risk? You decide. I fear this will lead to massive capital outflows from weak Eurozone countries, just about the last thing they need right now.
This is not only causing a large exodus of money out of euro banks, it is also creating some wariness among American depositors. Most, however, will go down with the ship (bank) because Americans simply cannot fathom any other way to manage their funds.
–Below is an additional witness to the ECB’s current strange move that appears to be a deliberate attempt to drive away big depositors – those who deposit €100,000 or more. A new Euro law has made it legal for failing European banks to confiscate funds following the model of Cyprus. It seems to me that this has the potential of killing the Euro as an international currency.
European depositors could suffer in future bank bailouts under new law
HELSINKI (Reuters) Apr. 4, 2013 – Big bank depositors could take a hit under planned European Union law if a bank fails, the EU’s economic affairs chief Olli Rehn said on Saturday, but noted that Cyprus’s bailout model was exceptional.
“Cyprus was a special case … but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down,” Rehn, the European Economic and Monetary Affairs Commissioner, said in a TV interview with Finland’s national broadcaster YLE.
“But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. However, the limit of 100,000 euros is sacred, deposits smaller than that are always safe.”
The European Commission is currently drafting a directive on bank safety which would incorporate the issue of investor liability in member states’ legislation.
To secure a 10 billion euro EU/IMF bailout last month, Cyprus forced heavy losses on wealthier depositors. Initially it had also pledged to introduce a levy on deposits of less than 100,000 euros – even though they are supposedly protected by state guarantees – before reneging in the face of widespread protests.
The Cyprus fiasco is a bankster beta test that is being used to test the minds of bank depositors. If there is no uprising in Cyprus, the banksters will move on to Greece, then to Italy, and on to Spain. Even New Zealand is rumored to be in the cross-hairs of the banksters. In short, these tactics will spread like wildfire to other nations including the United States.
Get your money out of the bank immediately. Leave just enough in the bank to pay bills. Find a better, safer home for your treasure. Bank safety deposit boxes are not safe either. They are already being raided (click here).
—————————————————
Can the Banksters Grab Your Bank Deposits?
by Lawrence Rafferty, 1, March 31, 2013
The recent news about Cyprus banks confiscating depositor’s funds sent chills throughout the financial world here and abroad. I couldn’t believe that the plan in Cyprus hinged on the idea that the bank could just steal customer’s funds to balance the bank’s books. I muttered to myself when I read the story that something as crazy as that couldn’t possible happen here in the United States. Unfortunately, I learned that the plan to pull a Cyprus type grab here was already in the works.
“A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds. ” NationofChange
The above article explains that most of us do not realize that when you deposit money in a bank, that it becomes the property of the bank and we become unsecured creditors of the bank! “Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.” The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price?” NationofChange
If I deposit $1,000 dollars in my local bank, I trust that the funds are safe and protected by FDIC insurance and that even if the bank fails, I will get my money back. Under the plan listed above, we may not even be able to fall back on the FDIC insurance coverage. The FDIC-Bank of England plan would supersede our FDIC coverage and we would be relegated to become a “shareholder” in the failing bank or its successor entity. Let me see if I understand this scheme. The bank who is failing due to mismanagement or due to risky investments could steal my funds and force me to accept stock in a company led by poor businessmen with an even poorer business record! If you are brave enough, check out the full FDIC-Bank of England plan here.
Cyprus wasn’t the only place where a bankster grab of deposits was put into place or is being discussed. It is being discussed in New Zealand as well. “New Zealand has a similar directive, discussed in my last article here, indicating that this isn’t just an emergency measure for troubled Eurozone countries. New Zealand’s Voxy reported on March 19th:
The National Government [is] pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts . . . .Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.” NationofChange
To be clear, this joint FDIC-BOE plan would need enabling legislation to be passed before it could become the law of the land. However, the bankruptcy laws have put unsecured creditors, which depositors would be labeled under the plan, lower in seniority to the claims of derivative counterparties which would mean that the very parties who are causing the bank to fail, could collect before the innocent depositors.
“In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders.” NationofChange
This so-called plan has been labeled a wealth tax in Cyprus, but the United States banks hold the deposits of the poor and middle class and those deposits would be at risk if this type of plan is actually activated. If this type of plan was ever activated or authorized by Congress, why would anyone ever deposit their funds in one of the major banks that could be at risk of failing due to risky derivative investments when those very deposits could be at risk? If the bank files for bankruptcy after depositors funds are confiscated, would depositors be left out in the cold entirely?
This type of bank bail out is an end run on depositors and on the American public. I can only guess why the corporate owned mass media has not been carrying this story. I do not think that I would every put any money in any of the big multi-state banks in light of this potential nightmare of a bailout. I would love to see the Senate hold a hearing to question FDIC officials on this joint plan. While the wealthy use the banks, a good portion of their wealth is in other investment vehicles and therefore the brunt of the bailout could be borne by you and me. Of course the banks will claim that we would receive stock in lieu of the confiscated funds, but can you pay your mortgage bill with stock from a failing bank?
What would you do if your bank confiscated your hard earned deposits to pay their bills? What happened to taking personal responsibility for their mistakes? Too big to fail, too big to jail and now, too big to cover their own losses! Is it any wonder that the banks want no part of Dodd-Frank and the Consumer Protection Agency?
_________________________________________________________________________