Is cash in the bank a safe option? Bail-Ins begin in Europe


Financial Stability Board and Bail-Ins

 

 

 

 

 

 

 

 

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 and in the UK.

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 :

The rescue was a bail-in meaning bondholders suffered losses unlike the hugely unpopular bank bailouts during the 2008 financial crisis, which cost ordinary EU taxpayers tens of billions of euros.

The banking cartel has moved from bail out, which is a commission to levy the loan against the taxpayers via the debt accrued by the government, to a direct levy upon the public via the bail in on their bank accounts. This is possible only because your bank account is actually an account for your Legal Fiction and not you the man or woman. It is ‘Legal Serfdom’.

Correspondents say [Italian Prime Minister] Renzi acted quickly because in January, the EU is tightening the rules on bank rescues hey will force losses on depositors holding more than 100,000, as well as bank shareholders and bondholders.

. . . [L]etting the four banks fail under those new EU rules next year would have meant sacrificing the money of one million savers and the jobs of nearly 6,000 people.

That is what is predicted for 2016: massive sacrifice of savings and jobs to prop up a systemically risky global banking scheme.

According to former hedge fund manager Shah Gilani, writing for Money Morning, there 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.

In a May 2013 article in Forbes titled The Cyprus Bank Bail-In Is Another Crony Bankster Scam, Nathan Lewis explained the scheme like this :

At first glance, the bail-in resembles the normal capitalist process of liabilities restructuring that should occur when a bank becomes insolvent. . . .

The difference with the bail-in is that the order of creditor seniority is changed. In the end, it amounts to the cronies (other banks and government) and non-cronies. The cronies get 100% or more; the non-cronies, including non-interest-bearing depositors who should be super-senior, get a kick in the guts instead. . . .

In principle, depositors are the most senior creditors in a bank. However, that was changed in the 2005 bankruptcy law, which made derivatives liabilities most senior. Considering the extreme levels of derivatives liabilities that many large banks have, and the opportunity to stuff any bank with derivatives liabilities in the last moment, other creditors could easily find there is nothing left for them at all.

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Further Study
In Profile : G-SIFI total corporate dictatorship directed by the Bank of England
Restructuring of sovereign debt : UN Expert stresses GA principles are binding
The City and Re-hypothecation, David Cameron and Veto