Could the Banksters Grab Your Bank Deposits?

200px-FDIC_2500_sign_by_Matthew_BisanzRespectfully submitted by Lawrence E. Rafferty- Guest Blogger

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?

145 thoughts on “Could the Banksters Grab Your Bank Deposits?

  1. Great story Larry…. I think I sounded that bell on another thread…. The plan is to steal money that has a shaky history first….. Who would they go and complain to…. Now they may end of dead…. But hey, not the first time….. This is really an issue for the G7…. But because of necessity… They had to expand this ino to the G20….. In order to get other out lying country’s to go along…… Recall what happened to the so called rogue trader that is said to have been an embarrassment to I think France….. I think the name of the bank was society general or something….

  2. RAFFLAW:

    did I miss something? I thought the EU central bank and members of the EU along with the government of Cyprus were the ones forcing the banks to take depositors money.

    I am also wondering why you dont decry the same taking of peoples money here in the US with the printing of money for stimulus and deficit spending.

    I also suggest you do your homework and make sure your bank is on sound financial ground.

  3. Social security, at least disability, has ended sending out checks, instead relying on direct deposit (“Social Security recipients who don’t have a bank or credit union account or who prefer using a credit card account have the option of using the Direct Express Debit MasterCard card account.”)
    What a boon that would be, having to hope to change to the card before too many months went by with the checks going directly to the bank, before you could stop it.

    (And the same old, same old from other threads. Why hasn’t media reported? Because Lohan and Kardashian so much more important (and people seeming to be happy with this opiate of the masses reporting)

  4. LJC,

    What has me intrigued… Hey does the SSA need 190k rounds of hollow point bullets…. I understand DHS 360 a lot quicker than the SSA need….

  5. Ay maybe they need them for the folks who choose not do the direct deposit with their ss (and other federal) checks.

  6. Uhhh… who in USA is not aware of how banks operate ever since 1929? We already know that our funds are at risk ever since the bank corruption schemes within last few decades (i.e. Savings & Loan Crisis etc.) Our only guarantee of funds is FDIC. But that only comes with conditions. Your bank can invest your funds anyway they wish. So I guess they can do just as you say here in America, but the Feds will jump in to help us with the Federal Deposit Insurance Corporation. If they fail then… oh well!

  7. My disabled daughter does not have a bank account so they sent her a debit card. Damn banks don’t miss a trick. When she withdraws cash from an ATM, the bank charges a fee because she is not a depositor with the bank. Fees typically run $2.50 to $3.50 per transaction, depending on who owns the ATM. You could not sell this to the current Congress, but it ought to be illegal to charge people on SSI or SS a fee for using a debit card.

  8. I just read a news article that broke my heart. The CEO of Bank of America did not make as much money in 2012 as he did in 2011. His pay was cut a hundred thousand dollars. He only made $7.4 million in 2012. How will he ever get along on that paltry sum?

  9. Just to be clear

    Bank of America has $75 trillion in notional derivatives.
    JP Morgan Chase has $79 trillion in notional derivatives.
    World GDP is $70 trillion.

    However, the good news is they only have 12 trillion in cash
    cash at risk derivatives, which just happens to be the GDP of US.

    Looks like if they took all of the money, they still wouldn’t have enough…

  10. Great article and information. All eyes in America should be on Greece and the Eurozone to see what is in store for us. So far its been what I would call austerity light but I fear that the full measure is going to be poured out into our cups eventually.

  11. LK,
    It is particularly egregious because the poor, disabled and retired have no choice. They are not sent a check, they are sent that piece of plastic. Of course, there is an upside. Her check never gets lost or stolen out of the mailbox, and the money is deposited on it precisely at midnight on the due date.

  12. Looks like I lost a month’s SS. I didn’t want direct deposit so waited until the last minute. No check this month, also no debit card. Will I get double the amount next month?

  13. RWL, That’s actually a very good question and probably depends entirely on your point of view. Do you look at the as yet unregulated banks as following the same path to utter economic destruction or not?

    From article: “To be clear, this joint FDIC-BOE plan would need enabling legislation to be passed before it could become the law of the land.”

    Congress would NEVER do THAT. LOL. After all, they work for us.

    Pension and various saving accounts/CDs. That’s what working people have. The lack of regulations on banking/investment keeps pension money in various instruments under constant threat. (Bankruptcy laws regarding employer sponsored pensions are their own criminal enterprise.)

    I have wondered how the combined savings and investments made by us plebs through banks, like college funds for the kids, CD’s and saving accounts, could be ripped off. I worry about what scheme is being cooked up and blessed by the Congress (when needed) to loot the last bit of money from the untermenchen. FDIC-BOE sounds about right as tools go.

  14. OS, I did not know that. The better half and I do not get SSI so I’m not really familiar with it. LOL, all I know is I had 39 quarters, missed it by a smidge. I know government food assistance went to a card because I see them used at the grocery, but I think that’s a state card. I guess government is getting out of the check writing business. I wonder if the banks are charging the state and federal government a fee to participate in the programs? Seems like it should be the other way around though since the consumer is a captive one.

  15. I remember the bumper sticker back during the Vietnam War. “Nixon: Pull Out Now Like Your Father Should Have.”
    Well, if I pull my money out of the bank now, what can I buy that will hold value? Inquiring minds want to know. Dont tell me dog biscuits.

  16. The Harper Government never naps:
    http://intellihub.com/2013/03/29/cyprus-style-bail-ins-are-proposed-in-the-new-2013-canadian-government-budget/
    The politicians of the western world are coming after your bank accounts. In fact, Cyprus-style “bail-ins” are actually proposed in the new Canadian government budget.
    by Michael Snyder
    Economic Collapse Blog
    March 29, 2013
    When I first heard about this I was quite skeptical, so I went and looked it up for myself. And guess what? It is right there in black and white on pages 144 and 145 of “Economic Action Plan 2013″ which the Harper government has already submitted to the House of Commons.

    This new budget actually proposes “to implement a ‘bail-in’ regime for systemically important banks” in Canada.
    “Economic Action Plan 2013″ was submitted on March 21st,
    which means that this “bail-in regime” was likely being planned
    long before the crisis in Cyprus ever erupted…

  17. Everytime I start to read 1 of these articles I know what’s coming. I start grinding my teeth, which is interesting, because I don’t have any teeth to grind. And most of the politicians are right in the sack with them. In order to wield power successfully without it corrupting you, you need to keep your ethics in in in. That is why the imperial presidency of Barack Obama frustrates me and saddens me. Why were too big to fail and too big to jail successful? The Attorney General was given direct orders not to criminally prosecuted these cases. Yes, they did go after some civil prosecutions, but only because it financially benefited the US government not out of some sense of justice. Yes, I know that in a criminal trial fines could be assessed as well even substantial ones. But all it does is give the politicians boasting rights and white collar criminals buying their way out of jail. The Untouchables describes them perfectly.

    Unfortunately, I expect more of these blogs and articles not less. At least I am glad to say they are superbly written and researched.

  18. Great article, raff. Good information about a topic I haven’t been paying as close attention to as I should. This has all the earmarks of a prelude to a worse disaster than the CDS debacle.

    Too big to fail, too big to jail, too big to regulate all means too big to exist.

    It’s time to break up the big banks and put in an equivalent of a stronger version of Glass-Steagall – one that holds bank officers personally accountable and provides for prison sentences and asset forfeiture for co-mingling commercial and financial banking as well as install protections for consumers.

    Enough is enough. Until it’s too much. And that’s when the pitchforks will come out. I’ll put on the popcorn.

  19. Gene

    i expect the only law we’ll get out of it is a promise, cross their hearts, they’ll only do this once.

    or until they need to do it again.

    but i don’t expect the banksters or the mittsters to help out with anything but words.

  20. Me either, pete. Some people learn the lessons of the patterns of history and are good enough at math to realize 99 > 1. Some people aren’t quite so knowledgeable or observant. Especially when blinded by their own ego and unlimited greed.

  21. BarkinDog:
    If you keep your money in cash under the mattress, it will be a little safer than in the bank. But embedded inflation will make it worth 5 to 20% less each year. Storing your wealth in greenbacks whether in the bank or in FRNs in your hand is a stupid and risky proposition, as it is based upon the ‘full faith and credit of the US Govt’. That faith will very rapidly evaporate when the state of the money supply, compromised by the US Debt, becomes so obviously pathological that even the most fiscally ignorant person in the street will realize that greenbacks will soon be worthless. Bank runs will become rampant which will accelerate the inevitable, and the feds will do something rash, like what this article suggests and much more.
    My suggestion put your greenbacks into precious metals while their prices are still artificially depressed. That will not lose value during the time the US dollar implodes.
    Alternately, some kind of physical energy commodity, although that may not be as convenient in a govt SOE bind.
    Any durable commodity is better than cash.
    The sht will hit the fan within 3 years, likely within 1.5.
    When the US Debt reaches $18T, the whole thing will come down, greenback printing presses or not.
    The interest payments will equal the income of the US govt, and a catastrophic cascade will commence.

  22. A case for gold & silver. Money should be based on production, rather than rare metals, but its a safer bet than paper right now.

  23. All I know is, when everything comes down and sh*t hits the fan, we the people, better fix the problem once and for all and make sure the replacement govt that we appoint to stand in, is free of corruption.

    Then we need to make sure that we put in rules and regulations for things like this, things like Glass Steagall, and laws preventing people working for the govt to leave for private industry that they lobbied for (corruption).

    Then we need to tear down and dismantle DHS, The Patriot Act. FISA, NDAA. Yank the teeth out of the government spying on its citizens. Outlaw Law enforcement drones, spy capability drones and the collection of drone data that can be used by LE. Take out the Hoover mentality and kill it. Require warrants and probable cause.

    Next we need to for US corporations to bring jobs back home for the most part. It is time to give stronger worker rights. Time to end Corporate privacy violations and restrict a companies ability to collect data on the American people.

    Instead of creating new government agencies to restrict Freedom, it is time to create one that PROTECTS Freedom and Liberty. A Privacy and Rights Agency. A specific agency that exists only to protect the rights and privacy of the American people.

    Then make those rules almost impossible to repeal without essentially national consensus.

    Lastly, then get out government out of every other countries business. Kill off our Imperialistic interference. Stop creating new enemies.

    Reduce our military presence overseas. Reduce the amount of bases we have, make the Military Industrial Complex a servant for the country rather than its master.

    It is time for the American Government to work for the American people. To represent them. It is time for a corrupt free Congress and President. Time to hold the crooks accountable. Time to hold trials for the corrupt. Send them to prison.

    It is time for the American people to eradicate the Corporate Fascism that is taking over our country. Drive it straight from our shores.

    The USA is full of good people. Full of people who believe in live and let live. People who are truly well intentioned and kind hearted.

    But the US Government is a malicious, malignant, rotten, nefarious, and evil entity in reality. The American government, our Congress, our Presidents, simply cannot be trusted. They are liars. They are thieves. They are murderers.

    if you disagree, ask yourself, what makes our govt better or more trustworthy than anyone elses? As of now our govt is only restrained by the will of the American people. But the govt is increasingly pushing the envelope. They are seeing what they can get away with more and more and more. Soon they will no longer care what the American people want. Soon they will no longer fear the people. Then the real horror show begins.

    At its core, our govt is no different than the most ruthless Pirates. If the American Govt were a person, it would be an extremely manipulative, charming and scheming psychopath.

  24. Larry: (do you prefer Lawrence or Larry?)

    My only hope at this stage is that your article will somehow find its way into the minds of every person in the US having a bank account.

    I wonder if this applies to people who have money in investment accounts like those held by brokerages, which I believe are often covered by the SIPC

  25. LK,
    Yes on those EBT cards you see at the market. A lot of them are probably SSI or SS cards, but food stamp coupons are a thing of the past. That is probably a good thing. The coupons were often a means of barter. Drugs, cigarettes, beer, and other merchandise that the coupons could not legally be used for. At least the EBT cards have to be scanned at the store and most stores have their computer/cash register systems set to reject attempted purchases of forbidden items.

  26. Money is a fiction anyway – it is only worth something because everyone agrees it is worth something.
    Is it better or worse for you, if your bank account has a 10% haircut, or if your goverment is broken and decides to dilute their currency by printing 11% more of it?

  27. Fiction, no. Based on agreement, yes. Or an idea, backed by confidence. Both are foul play. The former is more overt & therefore blatant. On tends to attack the blatant crimes first, because, if you don’t, any criminal can & will walk over you & society. Then you go after the covert criminal too.

  28. Well guys, as you know, there is no such thing as a free lunch. So stop your whining, tighten your belt and get back to work.

  29. rafflaw,

    Thanks for this information. I’ve done a lot of reading about banking shenanigans/stories–but hadn’t heard about this. I keep my savings in an indepependent, mutually owned bank.

  30. I think Frank Zappa had something to say about this fourty years ago. There was that comedian relatively more recently as well. What was his name again? Oh yeah, Bill Hicks. He checked out a little early too.

    Go back to sleep. You might be dreaming?

    This post is a little bit out there even for Turley Land. I didn’t say that was a good thing or a bad thing. Just saying…

    Perhaps Jesus, the “children”, and that succulent lamb dinner put Turley in the nap zone and Rafferty figured he should bring the curveball hopeing it catches the outside corner of the thinly sourced plate on the first pitch.

    I think the umpire is currently about ready to make the call on the pitch and the fans that have been paying attention are in the process of standing up.

    Will it be 1 and 0
    Or 0 and 1?

    Any players on base? What inning is it?

    Should prove to be am interesting at bat.

    What’s the score BTW?

  31. Otteray:
    I am a little torn on your premise.
    The barter system is fundamentally better than EBT cards. That people sometimes used food stamps to buy other things than food might be a good thing. On the other hand, the purpose of them was for food.
    I might add people are still using EBT card credits for barter, it is just a little less convenient.

    Elaine:
    I too thought I knew approximately how banks collect deposits and loan out money; little did I realize that what they do is legally authorized gambling with money lent out that they don’t have, typically 900% of the actual money they have. The FDIC is the supposed safety net in case a depositor’s money is wiped out by a bank’s bankruptcy, but even that is a sham, because although it could cover an individual bank’s insolvency, the FDIC fund is a tiny fraction of what it would take to cover all insured depositors money if and when the system collapses are there are bank runs all over the place.

    This video explained it rather clearly; the first 3/4th of it are simply factual expositions of how it works, the last portion of the video are more conjectural and I don’t particularly agree with its summation or suggested cures to the problem.

  32. Some of us, who have been to court (for instance) do not have to worry about banks taking away our deposits. See? Silver lining. :twisted:

  33. RTC,
    are you suggesting that banks being able to grab depositors funds to correct their own errors and bad investments is a good thing?

  34. OS I may have missed it but is she unable to have a bank so she can do direct deposit? My bank has a debit card that has no costs associated with it so my SSD goes directly into my acc;t, and has very month for the past 30 years without missing a date (the gov;t is excellent with this and medicare, and paying on time). I then use either cash or the card all month. I do not pay any extra fees for the card.
    BettyKath I would be very surprised if they don’t send you the check you missed once they are aware of it.

  35. Rafflaw,

    You answered the question:

    A new report by the U.S. Army War College talks about the possibility of Pentagon resources and troops being used should the economic crisis lead to civil unrest, such as protests against businesses and government or runs on beleaguered banks.

    “Widespread civil violence inside the United States would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security,” said the War College report.

    The study says economic collapse, terrorism and loss of legal order are among possible domestic shocks that might require military action within the U.S.

    (Why Is The Government Conditioning Us To Austerity?). Real evil is afoot.

  36. OS, Your daughter should shop for a credit union that has a free atm near her. My credit union is in a city several miles from my home but has a network of free atms, including one not far from me. The membership fee required by the credit union is generally not that oppressive, especially considering the atm fees from the bank. The membership fee would be kept in her savings account until she closes the account, then she would get it back.

  37. rafflaw,

    Hypothesis: If statutes say our money is there money, that is a taking without just compensation or due process of law.

    Thus, the statutes that TAKE our money and give it to banksters is constitutionally infirm.

  38. BK,
    The problem is she did not get to choose her card carrier. It is through Chase, and there is no Chase bank or ATM anywhere near us. That means that if she uses any non-Chase ATM, she still gets stuck with the ATM fee.

    She gets so little on SSI that she cannot justify opening an account. I worry about what is going to happen to her after I am gone. My bottom line is that banks are charging the government for operating the service, then skimming off fees from the client for using the cards.

  39. If The Office of Management and Budget of the Reagan Administration knows anything about it, he says:

    “I invest in anything that Bernanke can’t destroy, including gold, canned beans, bottled water and flashlight batteries.”(David Stockman).

  40. rafflaw,

    Hypothesis: If statutes say our money is their money, that constitutes a taking without just compensation or due process of law.

    Thus, any statute that TAKES our money and gives it to banksters is constitutionally infirm.

  41. OS, Most credit unions don’t require a minimum balance beyond the membership fee ($5 -$25). Have the check deposited and then use a credit union credit card with automatic payment. The credit card can be set up with a maximum charge equal to her check so she doesn’t run up a huge bill. There are no interest charges as long as the bill is paid every month.

    A caution about debit cards vs. credit cards. Bad charges against a credit card can be challenged. Those against a debit card cannot. The debit card can be used to completely empty your bank account and there’s nothing you can do about it.

  42. Hi Rafflaw:

    Been thinking a lot about this column. Scared me; the safety of our money depends on the integrity of our leaders – a frightening thought.

    Here is a timeline (written by Grant Williams – “Things That Make You Go Hmmm…”) describing key events in the Cyprus crisis. As you can see, the one common thread in the narrative is the powerlessness of the Cypriot depositors (once the ride started, they couldn’t get off).

    Friday March 15th: Cypriot banks close.

    Saturday March 16th: Cypriot banks don’t open.

    Saturday March 16th: Cypriots are told they face the theft of their money by the government, in the form of a haircut on their deposits of between 6.75% and 9.9%, depending on whether they were under the government-insured EU limit of €100,000 or not.

    Saturday March 16th: Cypriots are not best pleased.

    Sunday March 17th: Cypriots empty the island’s ATM machines.

    Monday March 18th: Cypriot banks don’t open again — this time because of a one-day bank holiday.

    Tuesday March 19th: No doubt aware of their fate should they vote in favour of the bailout terms, Cypriot MPs vote a resounding ‘NO!’ to the conditions imposed by the Troika.

    Wednesday March 20th: One-day bank holiday is extended to prevent a run on the currency.

    Friday March 22nd: Russia spurns request from Cyprus for financial lifeline.

    Monday March 25th: New bailout terms are agreed to that don’t involve haircuts below the insured limit but substantially increase haircuts on those above — which are technically uninsured in any case.

    Wednesday March 27th: Capital controls are announced, which will ‘only be in place for a week’.

    Thursday March 28th: Banks reopen under draconian restrictions, but Cyprus is calm.

    Thursday March 28th: The announcement is made that capital controls will be in place for a month.

    Could it happen here? I think so.

    Read Grant;s full column (https://d21uq3hx4esec9.cloudfront.net/images/uploads/ttmygh/6391/Apr_1_2013_TTMYGH.pdf); it serves as a companion piece to what you wrote.

  43. Thanks Steve.
    Dredd,
    I think the banks will argue that it is not a taking because they are “compensating” with bank stock under the scenario painted in the article.

  44. @Betty- “A caution about debit cards vs. credit cards. Bad charges against a credit card can be challenged. Those against a debit card cannot. The debit card can be used to completely empty your bank account and there’s nothing you can do about it.”

    Actually there is recourse. You contest the charges. It is then upon the merchant to prove that YOU made the purchases. If the merchant is unable to provide proof that you made the purchase the bank will reclaim the funds and restore them to your account. The merchant is the one who absorbs the loss.

    Most fees are waived also in that event.

  45. Dredd,

    To be a taking under the constitution it has to be some government action…. Period….. Not to say that it’s not a breach of contract between you and the bank….. But good luck in that too the sct has made class actions almost impossible….

  46. Anon,
    Right on the bank debit cards. My wife had her number stolen. There were several charges racked up, but we found out about it within a day. The bank reimbursed the account immediately. The culprit was at a University in Jakarta, Indonesia. Not much the bank could do about that, but they tried. At least between the bank and me, we were able to cancel the orders he had made. That is one of the advantages of using a locally owned bank.

  47. Folks:

    A little allegory of the banking situation in in Cypress:

    Scene 1: Finding the personal savings of the the depositor as a source funding

    Scene 2: Gov’t / Banking official appeals to the masses, which in turn express their true feelings.

    Scene 3: Little gov’t / banking agent begins manipulating the personal savings

    Scene 4: Contageon spreads accross the Mediterranian sea, crisis spreads with international players fighting tough markets and seas. Depositers are relentlessly pursued by top hat banking officials and their dogs.

    Scene 5. Gov’t banking official casts personal savings to the wind.

    Scene 6: Panic ensues, public runs for the money.

    Scene 7: Depositor tries desperately to retain what little savings is left

    Scene 8: Depositor relents and hopes to find security, but unfortunately shows more wishful thinking than anything.

  48. raf,

    Atta boy! You got the message out and the discussion going! And all Stuart Varney could say was,”It can’t/won’t happen here … ”

    Why? Well because we have legislators who will stop it. Kelly didn’t buy into that stance and neither should anyone else.

    Well done, raf, well done.

  49. I’ll pile on here… Congratulations. (Next thing we know, you’ll be a guest…)

  50. ap,

    I hope I’m not telling tales out of school, but they did ask him. We GBs are just as proud of raff as we could be.

  51. Wall Street Banksters now Too-Big-To-Jail
    Monday, April 1, 2013
    Posted by Jim Hightower
    http://www.jimhightower.com/node/7995#.UVrl3VfAGSo

    Some consider it un-American to like anything about those “namby-pamby” European nations, but still: Let’s hear it for the Swiss!

    In a March referendum, the mild-mannered, pacifist-minded Swiss people rose up and hammered their bank executives who’ve been grabbing rip-off pay packages. Two-thirds of voters emphatically shouted “yes” to a maverick proposal requiring that shareholders be given the binding say on executive pay. Violators of the new rules would sacrifice up to six years of salary and face three years in jail. That’s hardly namby-pamby.

    Indeed, it’s America’s lawmakers and regulators who’ve been squishy-soft on banksterism. None of the Wall Street titans who enriched themselves with rip-off pay packages while running financial scams that wrecked our economy have even been pursued by the law, much less put in jail. It’s no surprise, then, that they’ve gone right back to scamming and grabbing rip-off pay. Hardly a week goes by without another revelation of big-bank fraud, yet the banks just pay an inconsequential fine and the culprits skate free.

    Forget too-big-to-fail, banks have become “too big to jail.” Our nation’s top prosecutor, Attorney General Eric Holder, recently conceded that finagling financial giants are being given a pass: “It does become difficult for us to prosecute them,” he testified, “when we are hit with indications that… if we do bring a criminal charge – it will have a negative impact on the national economy.”

    Meanwhile, just four giants – Bank of America, Goldman Sachs, Morgan Stanley, and Wells Fargo – put nearly $20 million into last year’s elections, mostly to back Republicans promising to weaken the few feeble restraints we now have on banker thievery. Our lawmakers and regulators want to coddle the big bankers – with such keystone kops overseeing them, why would any Wall Streeter even think of going straight?

  52. Bombshell: Senator Sherrod Brown Questions Obama Nominee on Too-Big-to-Jail Banks
    When it comes to big banks, shareholders are protected; taxpayers screwed.
    By Pam Martens
    http://www.alternet.org/economy/bombshell-senator-sherrod-brown-questions-obama-nominee-too-big-jail-banks

    Excerpt:
    March 15, 2013
    Americans learned for the first time on March 6 of this year that the highest law enforcement agent in our country, Attorney General Eric Holder, weighs economic interests when deciding whether to enforce our Nation’s laws against criminal wrongdoers like the too-big-to-fail banks.

    The spectacle of warped law enforcement grew worse today during the Senate Banking confirmation hearing of Mary Jo White to head the Securities and Exchange Commission. Under questioning by Senator Sherrod Brown (D-Ohio), White admitted that even the economy of a foreign country – like Japan – is taken into consideration before bringing a criminal indictment in the U.S. Even worse, White was forced to admit that while working for the U.S. Department of Justice as the U.S. Attorney for the Southern District of New York (from 1993 to 2002), she considered it appropriate to speak with Larry Summers (a Treasury Secretary in the Clinton administration) to weigh the economic impact of bringing an indictment.

  53. Blouise:

    And all Stuart Varney could say was,”It can’t/won’t happen here … ”

    Varney is wrong. It’s already happened here. It happened with the TARP bailout. Only then it was the taxpayers, not the depositors, who got the bill. Will politicians stick the taxpayers with the bill the next time?

  54. rafflaw,

    I found the following article, which was written in 2009:

    Are Uninsured Bank Depositors in Danger?
    Posted on February 13, 2009
    by Felix Salmon
    http://www.felixsalmon.com/2009/02/are-uninsured-bank-depositors-in-danger/

    Excerpt:
    It’s worth remembering that depositors are unsecured creditors of any bank; usually, indeed, they’re by far the largest class of unsecured creditors. Paul seems to think that they are, or should be, senior to bondholders: that might be true de facto, but it’s certainly not true de jure. *

    It’s this very fact which led to the implementation of deposit insurance in most major banking systems; at this point we’re up to $250,000 in the US, which is a lot of money. If a bank fails, the FDIC will ensure that its depositors are paid out in full up to $250,000 each. But this is an insurance policy: it’s not a declaration that deposits are in any way senior to bonds. And if bondholders are forced to take a haircut, then by the principle of pari passu there’s a strong case to be made that depositors should take a haircut too.

    In practice, this will apply only to uninsured depositors, of course. I’ve got a call in to the FDIC to find out what the total amount of uninsured deposits in the US banking system is, but given that total deposits as of June last year totaled over $7 trillion, it’s bound to be a large number.

    (Update: Found it, at the top of page 17 of this pdf. Total domestic deposits at FDIC-insured institutions are $7.23 trillion, and total insured deposits are $4.54 trillion. Which means that total uninsured deposits are $2.68 trillion. That’s huge.)

    The Washington Mutual precedent is interesting: the bank’s uninsured depositors remained whole even as its bondholders were largely wiped out. For the time being, I suspect that the FDIC will continue to try to make the distinction, and will put much more effort into protecting depositors than protecting bondholders. But as we’ve learned many times in recent history, it’s very dangerous to rely on precedent in such situations. And so there’s a good chance that at some point, a US bank failure is indeed going to result in losses for uninsured depositors. After all, that’s what always used to happen.

    *Update 2: John Hempton calls to inform me that depositors actually are legally senior to unsecured bondholders, although they’re junior to secured bondholders.

  55. “Varney is wrong.” (Nal)

    Agree. Kelly didn’t seem to be buying his explanation either.

    BTW … nice find

  56. Blouise 1, April 2, 2013 at 11:39 am

    “Varney is wrong.” (Nal)

    Agree. Kelly didn’t seem to be buying his explanation either.

    BTW … nice find

    ————

    Ditto.

  57. Sadly Canadian Government, where I hail from has the same brilliant idea. Under the guise of an economic action plan, it also purports to be able to do this. Part of the reason we have these so called TBTF banks is deposit insurance. This vile creation gives people false security that their deposits are safe when in fact they simply allow banks to draw more capital than they normally could. In actuality the FDIC could only cover 2% of so called insured deposits in the US, which is hardly adequate if there was a failure. The moral hazard these programs create cause people not to be diligent with which institutions they bank, believing the nanny state will protect them. Cyprus had deposit insurance, it was of little consequence. As with all so called government protection’s, there simply is none when the chips are down. The idea we need programs like these simply allows further instability in the banking system. So either we only have deposit insurance for banks that are not allowed to speculate, or we don’t have it at all. I would prefer the latter, but most statist’s believe this is a “right” so it would be hard to completely rid us of it.

  58. Thank You Mr Rafflaw i havent been paying as much attention to this part of the elites plan for humanities enslavement as i should have but i definitely will now

  59. Dave:

    The moral hazard these programs create cause people not to be diligent with which institutions they bank, believing the nanny state will protect them.

    Maybe, but banks are notorious for fudging their books making diligence difficult if not impossible. Along with the FDIC comes (should come) independent oversight and regulation. What you call the “nanny state,” I call protecting the general welfare of depositors from greed, corruption, and stupidity.

  60. rafflaw 1, April 1, 2013 at 8:32 pm


    Dredd,
    I think the banks will argue that it is not a taking because they are “compensating” with bank stock under the scenario painted in the article.
    Anonymously Yours 1, April 1, 2013 at 9:41 pm

    Anonymously Yours 1, April 1, 2013 at 9:41 pm

    Dredd,

    To be a taking under the constitution it has to be some government action…. Period….. Not to say that it’s not a breach of contract between you and the bank….. But good luck in that too the sct has made class actions almost impossible….
    ==============================================================
    Sounds like no wiggle room at all.

    I have to withdraw the hypothesis as having been falsified.

  61. Woah, congrats Raf, not only did Kelly ‘mention’ you, she made the article the springboard- the hook- for the segment. Well done.

    Varney is a trusting soul is he not?

  62. Rafflaw, late to the party, but congratulations, Nice springboard for the interview, and then included in it as well. very nice.
    Sure hope Varney is right and can’t happen here (though think he is wrong too.)

  63. You know, back in the day, sometime in 1766, our forebears were attempting to point out certain facts to the Parliament of Great Britain as they pertained to the constitutional order under which we were then presently living. Boston was a garrison town thanks to the Quartering Acts and the Townshend Acts were rumored to be coming (Revenue Act of 1767, the Indemnity Act, the Commissioners of Customs Act, the Vice Admiralty Court Act, and the New York Restraining Act among others).

    The House of Representatives of Massachusetts pointed out to the King and Parliament – “A Power without a Check is subversive of all Freedom.”

    Down the road a bit, as a reaction to the Great Depression, we passed The Banking Act of 1933 and extended federal oversight to all commercial banks for the first time … a Check on a Power, if you will. I believe we can safely assert that that Check has failed miserably and the Power banks exercise is deeply subversive to our Freedom. If we are to reclaim our Freedom to do with our money as we please, it is time to put in place firm Checks on the Power of banks.

    What was old is new again.

  64. Nal,
    thanks for including the clip from Fox News. It was a pretty crazy day. Thanks to all for their good wishes. Since I have a face for radio, I thought it made sense to decline the request. It was also nice to hear Prof. Turley’s blog site get a plug on the air.

    I do think Mr. Varney was wrong to state that it could not happen here. As Nal stated earlier, if they could stick it to the taxpayers under TARP, it would be an easy vote for Congress to save their friends a second time. I don’t know if it is likely, but the FDIC-Bank of England plan is one scary document.

  65. Elaine,
    Thanks for the 2009 Salon article. I believe it was written prior to the changes in the bankruptcy laws.

  66. They could grab our money but while Americans have unlimited access to firearms and transportation it would be suicidal, and they know it.

  67. Raff,

    Sticking it to the taxpayers under Dodd-Frank doesn’t appear to be an option anymore. The Bank of North Dakota is the only state-owned bank in the country. May be time to add some more – for those who at least want to maintain our principal.

  68. Here in Italy it already happened. Before the acceptance of Italy in the Euro gropup, Mr. Amato, at that time head of a “technical” government (this is a term invented by ours politician when there is no voted government in charge) robbed 0.6% of all the private owned bank deposit. And now? no later than 6 months ago Mr. Monti, once again head of a technical government, devolved 4billion of tax money (collected from first house property tax) to a bank that, as of today, is worth less than half that money.. and we are expecting something Cyprus styled to happen.. time are getting tough and tough every day.. I started to prep because I was affraid of natural disaster.. now I am more concerned of bank disaster..
    Take care
    CV

  69. You are right Nal. That maybe why this FDIC-Bank of England plan was created.
    Cris,
    Thank you for your Italian perspective of this issue!

  70. Blouise, I sure hope he got paid for his statements, he was doing a lot of smiling , I don’t think he took his own statements personally. Correct me if I’m wrong but wasn’t the the ’33 law the one that separated investment from commercial banking? Wasn’t that modified or repealed during Clinton’s tenure? I haven’t looked it up yet but I recall the deed that led to ’08 being done during the Clinton years. Lol, please correct me if I’m wrong, how will I know to have a grudge against if I don’t have the facts? :-)

  71. lotta,

    Yeah … Glass–Steagall but Glass-Steagall is more often the term used to refer to the portion of the Act that limited commercial bank securities activities and affiliations between commercial banks and securities firms. Senator Glass was the one who was most concerned with “speculative” bank activities. Representative Steagall was mostly concerned with a federal system of bank deposit insurance. Both were democrats, one from Virginia and the other from Alabama. Lots of repeals and replacements since then.

    It did extended federal oversight to all commercial banks for the first time and provided real and measurable stability for the decades it was in force.

    Had the fools in Washington, including Clinton, left things alone, we would all be in much better shape. They fixed something that wasn’t broken and opened the gates to the greedy. Da*n fools.

  72. Snyder of the Economic Collapse, Gerald Celente of theTrends Journal, Max Keiser, Alex Jones, Paul Craig Roberts, Michael Hudson, et al have been telling this story for years. Get ye to a Credit Union, and while you’re at it: TO THE BARRICADES! Just sayin’. Over and out.

  73. to check the banks power, you need to get government out of banking. Quit insuring deposits and quit regulating banks and make sure people learn how to read financial statements so they can know which banks are well run and which arent.

    Let the citizens check the power of banks with the power of their pocket books and knowledge.

    The only reason the rich have so much power is because government is in bed with them.

  74. Bron,
    with all due respect, that is the exact opposite of what needs to be done. The banksters who are to big to jail or fail are pushing for these kind of bailouts. If the government isn’t there to control this kind of scary bailout plans, who will?

  75. rafflaw:

    if the government wasnt involved there would have been no bailouts and the people who ran the banks would have been jumping out of windows or working at McDonalds by now. But instead they are at their clubs drinking gin and tonics and talking about how stupid government is and how America is a great country [in sarcastic tones] because they can screw the pooch and still be on top of the world.

    In a free society, they would not be trusted to run a 7-11 again but in our crony fascism society they are treated like kings for delivering tax payer money [loot] to the corporations.

    So with all due respect, government is the problem and more government isnt going to solve it.

    No disrespect intended but you and others who think like you do are the reason we had the bail-outs to begin with. People who think like I do were willing to let the market work to absorb the failing banks but Bush/Paulson/Greenspan thought they knew better and did TARP which was a manifestly bad idea.

    They said they did it to save Main Street, what they really did it for was to save the fortunes of a handfull on Wall St.

    Liberals always talk about helping the little guy but support the ideas that always help the big guy, why is that?

  76. Bron,
    The banks gambled the money away. That wasn’t government’s fault. I don’t disagree that TARP should have been initiated, but I would have prosecuted the banks that broke the rules. You may want to double check and see who started TARP to begin with. If regulations hadn’t been erased that prevented this kind of gambling, we wouldn’t have had the problem to begin with.

  77. Bron,
    I almost forgot. It was the banks themselves that wanted the bailouts and came to the Fed and Bush on bended knees. The market was not going to “absorb” the failed banks as you suggest.

  78. rafflaw:

    in Sept 2008 the market was starting to make the adjustments and then the Bush Admiinistration floated the possibility of a bail out and that was it.

    Many banks did not want the money and were forced to take it because the feds didnt want people to know which banks were in trouble.

    The problem began when banks started giving loans to people who could not pay them back and it was also started by Greenspan artificially keeping interest rates low to keep the economy moving so Bush could have money for his wars.

    The entire government is corrupt from top to bottom. All political parties are to blame, personally I blame republicans more. They always talked against big government, apparently only to get re-elected by suckers like me.

  79. Bron. Hank Paulson instituted TARP because we were days if not hours away from an electronic bank run.

  80. sMOM:

    I think he used that as pressure to do the TARP.

    arent you a bird person?

    have you ever seen birds eating forsythia buds and blossoms? They have decimated a big bush outside my office window. It looks like a Charlie Brown Christmas tree. The birds doing it are purple finches/grossbeaks.

  81. bron, Yes, but it is usually the cedar waxwings. I get red finches and an occasional gold finch. It must me spring time in Virginia. We are heading out there next week.

  82. Swarthmore,
    You are right about the cedar waxwings mobbing a tree. They will sometimes get drunk after eating so many leftover crab apples in the early spring.

  83. rafflaw,

    Off topic–but I thought you’d find this blog post by Matt Taibbi interesting:

    The Growing Sentiment on the Hill For Ending ‘Too Big To Fail’
    POSTED: April 3, 2013
    http://www.rollingstone.com/politics/blogs/taibblog/the-growing-sentiment-on-the-hill-for-ending-too-big-to-fail-20130403

    Excerpt:
    First, a quick housekeeping note: About a month ago, I got a call out of the blue from Vermont Senator Bernie Sanders, who’s one of my favorite people and something of a political hero of mine. Bernie helped me many years ago, back when he was still a congressman, by letting me tag along for weeks for a story about how the House works that ultimately was called “Four Amendments and a Funeral” – an experience that taught me an enormous amount about how our government operates, and also in a weird way left me less cynical, as it showed there were still plenty of avenues where a determined individual could work the system.

    In any case, Bernie a month or so ago asked me to join him in Vermont for a pair of town meetings on Wall Street issues. It’s a tremendous honor and both events will be happening next Friday, one at the University of Vermont in the afternoon, the second in downtown Burlington in the evening. Entitled “Taking on Wall Street and the Big Banks,” Bernie and I will join in a public discussion about a lot of things, including the power of the financial sector and what can be done about it. It’s a very cool thing and I’m really looking forward to it – if you live in the area, please come by.

    I mention this as a backdrop to some news I didn’t get a chance to post last week. Since part of the Sanders discussion is going to be about “What we can do about it,” it’s worth noting that at least as far as the Too Big to Fail issue is concerned, there’s been a bit of an interesting development of late – some momentum is building in Washington toward reforming the banks.

    Start with the most recent news: last week, Sanders announced plans to introduce an interesting new bill, one that’s a direct response to comments made recently by the likes of Eric Holder about the difficulty in prosecuting big banks. Holder said some institutions have grown so large that prosecuting its executives may have a “negative impact on the national economy, perhaps even the world economy.”

    This was an extraordinary statement to come out of the mouth of the Attorney General – essentially announcing in advance a disinclination to prosecute a whole class of people. It’s Minority Report in reverse – pre-noncrime. What was even more bizarre was that this wasn’t an inadvertent comment or a slip of the tongue, it was absolutely consistent with comments made by other DOJ officials late last year after the slap-on-the-wrist HSBC (money-laundering) and UBS (rate-fixing) settlements. Worse, after Holder and other prosecutorial pushovers like Lanny Breuer made these comments, there was utter silence from the White House, making it crystal clear that this is a coordinated policy.

    What the Sanders bill would do is force Holder and the White House to actually spell out the policy. It would give Treasury Secretary Jack Lew 90 days to compile a list of all the financial institutions that they think are too big to prosecute. The list would include “any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance.”

  84. This will seem somewhat bizarre, but I actually hope they try it on. However, I’m fearful that as with previous examples of bankster over-reach, this STILL might not be enough to energise the required popular revolution.

    When will the people cry enough? I’m actually keen to find out what the breaking point is.

  85. Z,
    I would rather not see the breaking point. It would not be pretty. I would prefer to solve or alleviate the problems before that tipping point is reached.

  86. We could all exist & do better using gold, silver, bitcoins, barter or any other medium. If one is banned by our sick government, there are others.

  87. […] This is already being touted as a solution to the Eurozone problems. In the US, the idea put forward is that bank customers are by proxy shareholders in the bank and should take a haircut if the bank goes under. The FDIC is increasingly challenged to guard people’s money when banks get in trouble. By law, all depositors shares are covered up to $250,000. But with a minor adjustment or two with the law, account-holders could be forced to line up with other claimants to accept pennies on the dollar after a bank goes south.  Here’s a longer explanation of how this could come about from Jonathan Turley’s blog. […]

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