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It Can Happen Here: The Confiscation Scheme Planned For U.S. And U.K. Depositors

Tuesday, July 16, 2013 - 8:38 AM
The 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.”  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; and that the result will be to deliver clear title to the banks of depositor funds.  

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. 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? Most people keep a deposit account so they can have ready cash to pay the bills. If our IOUs are converted to bank stock, they will no longer be subject to insurance protection but will be “at risk” and vulnerable to being wiped out, just as the Lehman Brothers shareholders were in 2008. 

No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive.

It Can Happen Here: The Confiscation Scheme Planned for U.S. and U.K. Depositors | NationofChange
3
ShorebreakShorebreak2,367 posts since
Apr 6, 2010
Rep Points: 12,619
1. Tuesday, July 16, 2013 - 9:56 AM
SB:  I read your post, the article, and the comments with the article.  So what is the answer?  Credit unions??  Are we safe switching everything to credit unions?  If the majority of us switch to credit unions won't that cause a quicker collaspe of the banking system?  

Also, won't the public have to be advised ahead of time and given a chance to withdraw their deposits "without" penalty if they are going to change the rules in mid-stream?  We gave them our deposits with a certain understanding of what we were involved in.  If they make such a drastic change, it seems to me, we should have the right to withdraw without penalty.

I just sent the link to the article to my senator and congressman and Rand Paul.  I want to get their opinion on this.


When I was a child my deceased (now) beloved mom had a saying "Don't trust the banks".  Since she survived the Great Depression I felt it just had something to do with that era and felt we were safe now because of the FDIC insurance protection.  Are we back to "Don't trust the banks" ?  Will writing to our senators help?  I am at a lost as to what direction to go with this new news.  Any input would be appreciated.  Thanks!
2
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,087
2. Tuesday, July 16, 2013 - 11:04 AM
The article and the publication are not credible.
3
loulou521 posts since
Aug 3, 2010
Rep Points: 3,239
3. Tuesday, July 16, 2013 - 11:17 AM
SB:  A poster in the comments section wrote concerning this:

I looked at the FDIC report the author is talking about. It specifically says (on page 8, number 34):

"Insured depositors themselves would remain unaffected. Uninsured deposits would be treated in line with other similarly ranked liabilities in the resolution process, with the expectation that they might be written down."

That seems to contradit the entire premise of this article.

This was on page 8 #34 of the FDIC -  BOE document.  So if it is so, it does seem to contradict the rest of what the author is writing.
6
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,087
4. Tuesday, July 16, 2013 - 11:23 AM
Resolving Globally Active, Systemically Important, Financial Institutions

A joint paper by the Federal Deposit Insurance Corporation and the Bank of England 10 December 2012

Executive Summary Page 2:

"The unsecured debt holders can expect that their claims would be written down to reflect any losses that shareholders cannot cover, with some converted partly into equity in order to provide sufficient capital to return the sound businesses of the G-SIFI to private sector operation."

http://www.fdic.gov/about/srac/2012/gsifi.pdf
2
ShorebreakShorebreak2,367 posts since
Apr 6, 2010
Rep Points: 12,619
5. Tuesday, July 16, 2013 - 11:31 AM
   That is the same document I was referring to and it does have the statement in it on the page 8 #34.

    So what is your explanation for this being in the document?  Are we to ignore it?
2
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,087
6. Tuesday, July 16, 2013 - 11:37 AM
Re: paoli2 @ 3. Tuesday, July 16, 2013 - 11:17 AM:

Page 8, Part 34 of the joint plan primarily refers to the U.K. response to recapitalization.  It is not clear if that applies to the U.S. also.

From the posted article:

"No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance."

The FDIC needs to clarify if insured deposits in the U.S. are "unaffected" also.
2
ShorebreakShorebreak2,367 posts since
Apr 6, 2010
Rep Points: 12,619
7. Tuesday, July 16, 2013 - 12:03 PM
Insured deposits in the U.K. are specifically addresed in Part 17 on page 4 of the plan. Is there any reference to holders of U.S. insured deposits in the plan? The U.S. approach outlined on 6, beginning with Part 24 does not mention insured deposits "would remain unaffected".

Please see if you can find it.
2
ShorebreakShorebreak2,367 posts since
Apr 6, 2010
Rep Points: 12,619
8. Tuesday, July 16, 2013 - 12:20 PM
Here's one gold bug's opinion:

"Because this is a legal Central Banking agreement that will be applied globally, it also means that U.S. bank depositors will not be immune to this rescue mechanism. It means that no one should keep any amount in any bank that exceeds the FDIC guarantee. In fact, I would recommend only keeping enough money in the bank to fund your monthly or quarterly bill paying requirements. Any amount in excess of FDIC deposit insurance will be exposed to the risk bankruptcy."

The Golden Truth: The Frightening Truth About The Cyprus "Bail In"
1
ShorebreakShorebreak2,367 posts since
Apr 6, 2010
Rep Points: 12,619
9. Tuesday, July 16, 2013 - 12:51 PM
SB:   Maybe I am understanding what I want it to be but your above post seems to still state only amounts in excess of FDIC deposit insurance will be exposed to the risk bankruptcy.  I am hoping "one" of those reps I wrote to can give me more clarity on this.  It wasn't Ron Paul I wrote to but the son "Rand" Paul.  He seems to take these things more seriously than my other reps.  It is scary but there has to be more clarification on it.  Thanks for sharing.
2
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,087
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