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Old 04-01-2013, 07:05 AM   #1
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Snidely No banks are safe

Following the news that TBTF Cypriot zombie banks will steal from depositors rather than go through normal bankruptcy, we heard that Canada was ready to abandon fiduciary responsibility too. Now there are reports that the USA and the UK have an agreement in place to do the same:
Quote :
...
In the introduction, the resolution informs readers that the FDIC and the Bank of England have been working together to formulate the new bail-in model for future bank failures:
Quote :
The Federal Deposit Insurance Corporation (FDIC) and the Bank of England—together with the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, and the Financial Services Authority— have been working to develop resolution strategies for the failure of globally active, systemically important, financial institutions (SIFIs or G-SIFIs) with significant operations on both sides of the Atlantic.

The goal is to produce resolution strategies that could be implemented for the failure of one or more of the largest financial institutions with extensive activities in our respective jurisdictions. These resolution strategies should maintain systemically important operations and contain threats to financial stability. They should also assign losses to shareholders and unsecured creditors in the group, thereby avoiding the need for a bailout by taxpayers.
The joint US/UK resolution states that depositor haircuts are already legal in the UK thanks to the 2009 UK Banking Act:
Quote :
In the U.K., the strategy has been developed on the basis of the powers provided by the U.K. Banking Act 2009 and in anticipation of the further powers that will be provided by the European Union Recovery and Resolution Directive and the domestic reforms that implement the recommendations of the U.K. Independent Commission on Banking. Such a strategy would involve the bail-in (write-down or conversion) of creditors at the top of the group in order to restore the whole group to solvency.
And that the legal authority has already been given in the US buried in Dodd-Frank:
Quote :
It should be stressed that the application of such a strategy can be achieved only within a legislative framework that provides authorities with key resolution powers. The FSB Key Attributes have established a crucial framework for the implementation of an effective set of resolution powers and practices into national regimes. In the U.S., these powers had already become available under the Dodd-Frank Act. In the U.K., the additional powers needed to enhance the existing resolution framework established under the Banking Act 2009(the Banking Act) are expected to be fully provided by the European Commission’s proposals for a European Union Recovery and Resolution Directive (RRD) and through the domestic reforms that implement the recommendations of the U.K. Independent Commission on Banking (ICB), enhancing the existing resolution framework established under the Banking Act.

The development of effective resolution strategies is being carried out in anticipation of such legislation. The unsecured debt holders can expect that their claims would be written down to reflect any losses that shareholders cannot cover, ...
...
More: http://silverdoctors.com/fdic-bank-o...or-tbtf-banks/

Wall Street bankers breath a sigh of relief as their multi-million dollar bonuses are now safe. Instead of losing their jobs when the bank is dissolved in bankruptcy, they are going to get fat on the backs of depositors.

Edit: I found the source document that SD is quoting:
Quote :
Resolving Globally Active, Systemically Important, Financial Institutions

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

10 December 2012
...
http://www.bankofengland.co.uk/publi...2012/nr156.pdf
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Old 04-01-2013, 09:10 AM   #2
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So, we're all unsecured creditors now. Well that sucks. Most of us here grew up believing that our money was simply sitting in the bank, and when they made a loan at higher interest than they paid us, they kept the vig but still allowed us access to our meager little stash. Not so true any more I fear. These days "they" will simply do as they please with our loot and we will shut up and take it....or else.
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Old 04-01-2013, 12:50 PM   #3
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...

Slow bank run... I have been doing that for quite a while now. I get money, I take money OUT of the bank. Some stays in CA$H, some goes to buying gold. Nothing that has happened this year changes my view.

Nor did anything that happened last year, or in 2011, 2010, 2009, 2008, 2007.....
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Old 04-01-2013, 01:00 PM   #4
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Bottom line is that the ONLY safe bank is a depository bank, one where they charge you to safely STORE your money. Of course, that does not mean that the Feds could not steal it anyhow, just like FDR stole the gold from safe deposit boxes. It only means that you have taken one variable out of the equation - gambling by the banksters.
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Old 04-01-2013, 05:46 PM   #5
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Originally Posted by DoChenRollingBearing View Post:
...

Slow bank run... I have been doing that for quite a while now. I get money, I take money OUT of the bank. Some stays in CA$H, some goes to buying gold. Nothing that has happened this year changes my view.

Nor did anything that happened last year, or in 2011, 2010, 2009, 2008, 2007.....
Ditto, except Bing (my wife) buys gold, I buy silver. I honestly don't have a single piece of gold; I'm waiting to see my first Krugerrand....
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Old 04-01-2013, 06:27 PM   #6
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Originally Posted by Jay View Post:
...I honestly don't have a single piece of gold...
Me too.










I am assuming that the aren't, but just to throw it out there...

Are credit unions any more secure than the regular banks?
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Old 04-01-2013, 10:33 PM   #7
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Originally Posted by dontdeBasemebro View Post:
I am assuming that the aren't, but just to throw it out there...

Are credit unions any more secure than the regular banks?
Since they do the same thing as banks, but on a more limited scale, I don't see them being much more secure. They can still have bank runs, still freeze your accounts, etc. And they still loan out the money you "loaned" to them for safekeeping. Just a smaller, usually more local bank in my view.
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Old 04-02-2013, 06:07 AM   #8
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re: Credit Unions, I can only speak on these that I have researched myself, and these were Polish ones. I was doing a little research about their statutes, and the largest "union" of Credit Unions there (that all other local CUs are required by law to be associated in), in their statute, had a loophole, that would allow them to invest client funds into "other financial instruments". It is funny, how these three seemingly "benign" words were buried deeply in the statute, yet effectively, it allows them to do pretty much the same funny things with your money, as other banks. And all the rest of the statute, was about how one people save, the other will get credit for housing, and blahblahblah.

No need to say, I've lost all my interest in them right after digging up these three little words. No substantial difference between them & banks, and when the financial system collapses, they will be as leveraged & on a hook as anyone else in financial sector.

So to summarize, I would strongly suggest, to read their statute, and follow up EVERY reference, to a word, rather than assuming that "we all know how Credit Unions work". We don't
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Old 04-02-2013, 06:31 AM   #9
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Originally Posted by dontdeBasemebro View Post:
...
Are credit unions any more secure than the regular banks?
FWIW (from 2008): http://www.creditwritedowns.com/2008...nt-immune.html

See also: http://www.pmbug.com/forum/f4/bank-transfer-day-74/

And this site for rating banks was recommended to me on another forum a long time ago (in 2009):
Quote :
...
Normally, I wouldn't trust anything from thestreet.com but a few years ago they bought Weiss Ratings - a VERY reputable bank rating service and from what I understand they have not messed with it. You can screen your bank and also screen for high and low-rated banks in your area. The URL is here:

http://www.thestreet.com/bank-safety...ngsindex&tab=3
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Old 04-02-2013, 08:02 AM   #10
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Actually, our credit unions are safer than banks because of their charters. The first thing that helps is they are limited to a specific geographic or demographic area, which means it is impossible for them to get TBTF. The second thing is that they are non-profit, so they have minimal fees and no motivation to fuck their clients. Third is they cannot use bank funds for anything other than loans; no investing, no gambling, just loans. Fourth is that every member has a vote. fifth is they are limited severely as regards leverage. They cannot lever out twenty and thirty times.

All in all, if one were to be faced with choosing between JPM or a credit union, I would choose the CU every time. I am forced by circumstance to maintain a couple of accounts with BOA and one with Wells Fargo. Both banks fuck me at every turn of the road. The credit union however, is the best banking experience I have ever had. My wife and I bank at two local credit unions, and each one is as good as the other. Given my way, I would move all of my funds in to the credit unions.
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Old 04-03-2013, 10:41 AM   #11
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Krugman in NYT has commentary arguing for capital controls today. Disgusting.

http*//www.nytimes.com/2013/03/25/opinion/krugman-hot-money-blues.html
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Old 04-03-2013, 11:09 AM   #12
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that is Mish's response, on how Krugman is partially right - but for all the wrong reasons:

http://globaleconomicanalysis.blogsp...hot-money.html

Quote :
As is typically the case, Krugman gets part of the story correct, the sensational part (which helps explains his popularity). Everything else he says is generally rubbish.

Krugman is correct that Cyprus is going to be ugly. And he is sure to follow up with numerous "I told you so" articles when that happens.

This is where common sense stops and nonsense begins. Europe and the US do not suffer from lack of capital controls. The origin of this crisis is fractional reserve banking in and of itself.

The Krugman "solution" is more government controls, more taxation, more regulation, more manipulation, even to the point of actually advocating the "bad old days" when everyone had capital controls.

In addition to capital controls, Krugman advocates tariffs, advocates higher minimum wages, higher taxes, and more government spending.

Good grief!


Money flows to places like Cyprus, Luxembourg, and Spain "because of " inane Keynesian and Monetarist programs elsewhere.

Not once does Krugman ever stop and think that the very policies that he espouses are precisely what has caused the capital flight!

Rather than address the root problems, Krugman now wants capital controls on top of all the other foolish things he desires.

When does it stop Paul? When?

Read more at http://globaleconomicanalysis.blogsp...ZR8M6UxoCGb.99
EDIT:

this is quote from Krugman's piece:
Quote :
And it’s not just Europe. In the last decade America, too, experienced a huge housing bubble fed by foreign money(sic!), followed by a nasty hangover after the bubble burst. The damage was mitigated by the fact that we borrowed(sic!) in our own currency, but it’s still our worst crisis since the 1930s.
WTF?! "fuelled by foreign money"?! Is this guy for real? How possibly a Nobel Prize winner can make such a fucking retarded claim, and openly dishonest one? So Fed and their low interest rates, Affordable Housing programmes, Fannie & Freddie, are all fucking "foreign money" now, yes? Better yet, he contradicts himself in the very next sentence, "WE borrowed in our own currency". This guy is a fucking joke! I will have to remember to NOT listen or read his pieces, just as I've stopped watching anything with "Pierce Morgan" in it's title, to save meself from collecting too much of a negative Karma.

UGH, what a slimy, disgusting, treacherous bastard!
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Old 04-19-2013, 03:23 PM   #13
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Don't know if this is already covered somewhere, just saw it...

Quote :
SWITZERLAND REVISES 1934 BANKING ACT TO ALLOW BAIL-IN DEPOSIT CONFISCATIONS!
Quote :
The Swiss Financial Market Supervisory Authority (FINMA) has quietly joined the growing parade of western nations who have quietly re-written banking laws to allow depositor bail-ins upon the next banking crisis.
If Switzerland, the once ultimate safe haven for banking deposits across the world is preparing to confiscate depositors funds, there truly is no protection anywhere other than physical gold and silver in your own possession!
Quote :
In the event that a bank is failing or where its capitalization is no longer adequate, the Swiss Financial Market Supervisory Authority (“FINMA”) may take measures to improve such bank’s financial viability rather than liquidating it. “Loss absorption” and “bail-in” are important instruments to support any such measures.
http://silverdoctors.com/switzerland...confiscations/
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Old 04-19-2013, 03:34 PM   #14
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I'm wondering if the slam down in gold, obviously by people who can afford to take a loss, was intended to prevent a slow or fast bank run they fear, by seeming to take away PM's "safe haven" status right around the time we are also hearing of "bail-ins" and such. I rarely link to my own site here, but it's too much to type again right now, so here's the rest of my take on it.
http://www.coultersmithing.com/forum...1&p=4397#p4397
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Old 04-19-2013, 03:49 PM   #15
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It's quite possible the bail-in/"banks aren't safe" message is responsible for the purported runs on physical gold in the GLD, COMEX and LBMA systems (that are also speculated as motivations for the gold smash).

I must say though, that if this was the motivation, it's failing spectacularly as physical is flying off shelves everywhere around the world right now.
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Old 04-19-2013, 05:01 PM   #16
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Event horizon getting nearer?

Quote :
...
In a speech titled "Regulating Large Financial Institutions" Stein [Fed governor Jeremy Stein] made something very clear: if and when a TBTF fails, and since this time is not different, and a failure is only a matter of time, depositors will lose everything (courtesy of some $300 trillion in gross unnetted liabilities which once there is a counterparty chain failure, suddenly become very much net and immediately marginable - a drain of cash), which now that Cyprus is the template, is to be expected. Not only that but Stein makes it all too clear that part of the Dodd-Frank resolution authority guidelines, a bailout is no longer an option.
Quote :
Perhaps more to the point for TBTF, if a SIFI does fail I have little doubt that private investors will in fact bear the losses--even if this leads to an outcome that is messier and more costly to society than we would ideally like. Dodd-Frank is very clear in saying that the Federal Reserve and other regulators cannot use their emergency authorities to bail out an individual failing institution. And as a member of the Board, I am committed to following both the letter and the spirit of the law.
...
http://www.zerohedge.com/news/2013-0...ll-be-cyprused
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Old 05-07-2013, 02:53 PM   #17
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Quote :
Deposits of over €100,000 are likely to be hit in the event of future European bank collapses, according to a proposal put forward by the Irish presidency of the European Council ahead of a key meeting of finance ministers next week.

Discussions on the controversial bank resolution regime, which is likely to see savers with deposits over €100,000 “bailed in” as part of future bank wind-downs, are due to intensify this week in Brussels, ahead of Tuesday’s meeting, which will be chaired by Minister for Finance, Michael Noonan.
...
http://www.irishtimes.com/business/s...risk-1.1384295
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Old 05-07-2013, 03:18 PM   #18
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My good friend for many years lives in Wales and let me know that EVERYONE from Scotland, Ireland, Wales and Great Britain is scared shitless about their bank accounts. My friend owns his own auto customization shop and does quite a lot of work through the course of a year. In addition, many of the jobs he does requires up-front payments for expensive parts, motors, etc. and so he keeps a large amount of operating capital in the bank. His plan is to remove as much as he can, keep it in a "safe place" so that when the seizures happen, he will not be wiped out like every single small business in Cyprus was.

I cannot imagine that happening here, because the entire country woulf burn down. There would be bankers hanging from poles like apples on a tree at the end of a good summer.

He also said that Britain is considering sliding in some new bank regulations such as maximum allowable cash in any one transaction and maximum allowable withdraw at any one time or within a specific time period. These are real time events shaping up across the pond, so I suppose it's fair warning to us.
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Old 05-07-2013, 03:49 PM   #19
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Originally Posted by ancona View Post:
... Britain is considering sliding in some new bank regulations such as maximum allowable cash in any one transaction and maximum allowable withdraw at any one time or within a specific time period. ...
This is already here effectively (not literally). Cash transactions over 10K requiring filing paperwork for the overlords. Banks won't let you withdraw more than a few K in cash on any given day.
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Old 05-08-2013, 12:55 AM   #20
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Originally Posted by ancona View Post:
Most of us here grew up believing that our money was simply sitting in the bank
Hmmmm... it makes you wonder why the government-monopolized school system doesn't teach banking basics, or that there was a time when there was no personal federal income tax.
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