BANKS CAN NOW CONFISCATE 80 PER CENT OF YOUR BANK DEPOSITS-........

Banks Can Now Confiscate 80 Per Cent of Your Bank Deposits-Find Out the Most Vulnerable Bank...

12/12/2014

by C Serpa

bank america bail out

On the weekend of November 16th, the G20 leaders whisked into Brisbane, posed for their photo ops, approved some proposals, made a show of roundly disapproving of Russian President Vladimir Putin, and whisked out again.

It was all so fast, they may not have known what they were endorsing when they rubber-stamped the Financial Stability Board’s “Adequacy of Loss-Absorbing Capacity of Global Systemically Important Banks in Resolution,” which completely changes the rules of banking," reports Ellen Brown, Public Banking Institute founder, and author.

A May 2013 article in USA Today titled “Can FDIC Handle the Failure of a Megabank?” said:

     "So, you are going to have to save yourselves, and the way you are going to have to do it is by bailing in the money of your creditors.  The largest class of creditors of any bank is the depositors.”

"[T]he biggest failure the FDIC has handled was Washington Mutual in 2008. And while that was plenty big with $307 billion in assets, it was a small fry compared with the $2.5 trillion in assets today at JPMorgan Chase, the $2.2 trillion at Bank of America or the $1.9 trillion at Citigroup.

. . . There was no possibility that the FDIC could take on the rescue of a Citigroup or Bank of America when the full-fledged financial crisis broke in the fall of that year and threatened the solvency of even the biggest banks."

That was, in fact, the reason the US Treasury and the Federal Reserve had to step in to bail out the banks: the FDIC wasn’t up to the task. The 2010 Dodd-Frank Act was supposed to ensure that this never happened again. But as USA writes, there are “numerous skeptics that the FDIC or any regulator can actually manage this, especially in the heat of a crisis when many banks are threatened at once.”

"The G-20 met recently in Australia to make new banking rules for the next financial calamity.  Financial reform advocate Ellen Brown says these new rules will allow banks to take money from depositors and pensioners globally."

Brown explains, “It became rules we agreed to actually implement.  There was no treaty, and Congress didn’t agree to all this.  They use words so that it’s not obvious to tell what they have done, but what they did was say, basically, that we, the governments, are no longer going to be responsible for bailing out the big banks.  These are about 30 international banks."
"They are too-big-to-fail.  This was supposed to avoid too-big-to-fail, but what it does is institutionalizes too-big-to-fail.  They are not going to go down.  They are going to take our money instead.”

Part of the coming financial calamity will involve hundreds of trillions of dollars in un-backed derivatives.  Brown contends, “If the derivative bubble pops, nobody knows what is going to happen, and it’s obvious it has to pop.  It can’t just keep growing.  Depending on who you read, some people say it is up to two quadrillion dollars.  It’s virtual money, and it cannot keep going on.”

When a financial crash does happen, you can forget about getting immediate access to your money.  Brown says, “The banks will say, well, we don’t have it.  All the money goes into one big pool since Glass Steagall was repealed.  They are allowed to gamble with that money and that’s what they do.

   
   So, even though we are protected by the FDIC, the FDIC is not going to have the money. . . . This makes it legal for these big 30 banks to take our money when they become insolvent.  

In theory, US deposits under $250,000 are protected by federal deposit insurance; but deposit insurance funds in both the US and Europe are woefully underfunded, particularly when derivative claims are factored in. The problem is graphically illustrated in this chart below:
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FDIC Deposit Insurance Fund
fdic insurance fund

Everybody is concerned, and they do very risky deals and they are on the edge.  I think they have over $50 trillion in derivatives and over $1 trillion in deposits. . . The Dodd-Frank Act says we, the people, are no longer going to be responsible for the big banks when they collapse.

It is not clear the FDIC will even be able to borrow from the Treasury, but even if they could, who is going to pay that money back?  Let’s say they borrowed $1 trillion.  Who is going to pay that $1 trillion back?  It will bankrupt all the small banks that had to contribute to this premium.

They will say we’re raising your premium to everything you got, basically.  Little banks will go out of business, and who is going to survive–the big banks. . . . What we’re going to have left is five big banks, and everybody else is going to be bankrupt.”

The Low Amount of FDIC Insurance. See small white building in the middle...
fdic deposit insurance
US Bank Deposits vs. Currency in Circulation The discrepancy between deposits and currency in circulation is shown here.

This means in the case of a nationwide bank run in United States, theCyprus-style hair-cut on deposits ( a.k.a. deposit confiscation) would be over 80% for US commercial bank deposits.

There are not enough dollars circulating to cover all deposits if they were to be pulled at the same time. In case of bank runs this means withdrawal limits at ATMs and FDIC trying to help out to cover the losses.
The Most Vulnerable Bank
bank of america


"I think maybe Bank of America is the most vulnerable because of Merrill Lynch," says Brown.

   "Perhaps it is time to pull our money out of Wall Street and set up our own banks – banks that will serve the people because they are owned by the people."

Brown goes on to state:

   “Unsecured debt” includes deposits, the largest class of unsecured debt of any bank. The insolvent bank is to be made solvent by turning our money into their equity – bank stock that could become worthless on the market or be tied up for years in resolution proceedings.
   The power is statutory. Cyprus-style confiscations are to become the law.
   Rather than having their assets sold off and closing their doors, as happens to lesser bankrupt businesses in a capitalist economy, “zombie” banks are to be kept alive and open for business at all costs – and the costs are again to be to borne by us.


All this fancy footwork is to prevent a run on the TBTF (Too Big To Fail) banks, in order to keep their derivatives casino going with our money. Warren Buffett called derivatives “weapons of financial mass destruction,” and many commentators warn that they are a time bomb waiting to explode.

When that happens, our deposits, our pensions, and our public investment funds will all be subject to confiscation in a “bail in.”

"Perhaps it is time to pull our money out of Wall Street and set up our own banks – banks that will serve the people because they are owned by the people."



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Ellen Brown in this interview provided some of the excerpts above: