No banks are safe

DoChenRollingBearing

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Having some genuine FIAT$ / CA$H at home (or even tucked away in the Peru's of the world if you feel it is safe) is not a bad idea either.

As long as the bad guys don't show up...

:doodoo: :doodoo:
 

mmerlinn

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Having some genuine FIAT$ / CA$H at home (or even tucked away in the Peru's of the world if you feel it is safe) is not a bad idea either.

As long as the bad guys don't show up...

:doodoo: :doodoo:
Hmmm, I think I would rather risk the bad guys showing up than allow the fraudsters (Bernie et alia) to rob me blind the easy way.
 

smokey57

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Cash eventually will be outlawed for certain transactions and then altogether. Weve digitized ourselves to poverty. No coins, no dollars. Just digits.. and all tracked . For good of course.

Carry on comrades!
 

HCA1961

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Holy hell!
What's a man to do???
(Other than stockpile physical metals.)
 

pmbug

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Well, let's summarize:

Don't leave too much of your money in the bank. Bail-ins are the new normal.

Don't leave too much of your money in custodial accounts at a brokerage. Wall Street can rob you blind without legal repercussion apparently (MF Global, et. al).

Don't leave too much of your money in bubble markets (equities, bonds, real estate). High risk pending central banker whims.
 

Aubuy

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Well, let's summarize:

Don't leave too much of your money in the bank. Bail-ins are the new normal.

Don't leave too much of your money in custodial accounts at a brokerage. Wall Street can rob you blind without legal repercussion apparently (MF Global, et. al).

Don't leave too much of your money in bubble markets (equities, bonds, real estate). High risk pending central banker whims.
Continuing that train of thought:

It is probably safer if you owe a bank rather than having a bank owe you so some debt can be good, particularly if never have to pay it back.

If you move your PM's don't use airport baggage claim.

Don't mess with the IRS. :judge:
 

pmbug

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Looks like it's not just FDIC insured deposits that are going to get Cyprused in the great bail-in:
A portion of the $2.6 trillion money market fund industry would be required to fundamentally change how it prices its shares under proposals issued by U.S. regulators on Wednesday to reduce the risk of abrupt withdrawals.

But the Securities and Exchange Commission plan was not as strict as some market players feared and included an industry-favored provision for funds to charge withdrawal fees and delay return of funds to customers during times of financial distress.

For more than a year the SEC has been debating whether changes made in 2010 were enough to avoid a repeat of a run on money market funds seen at the height of the financial crisis.

The additional reforms proposed on Wednesday did not go as far as a draft proposal floated last year by then-SEC Chair Mary Schapiro, who left in December.

The fund industry had warned that further major reforms could kill investor interest in money market funds.

In a compromise move, the SEC's new plan mostly focuses on prime funds for institutional investors, which are seen as more prone to runs because those investors are more sophisticated and more likely to pull large blocks of money first in a panic.

The SEC estimated that institutional funds represent 37 percent of the market with $1 trillion in assets.

The SEC's plan calls for two alternative proposals that it said could be adopted alone or in combination.

The first piece would require prime funds used by institutional investors to transition from a stable, $1 per share, to a floating net asset value (NAV).

That reform is a direct response to what happened in 2008 when the Reserve Primary Fund, one of the largest money funds, suffered losses on Lehman Brothers debt and could not maintain its $1 per share price, known as "breaking the buck."

That ignited a run by investors across the money fund industry, cutting off a major source of overnight funding for many corporations.

The SEC said that retail and government funds, which are not considered to be at the same risk for runs, would not have to move to a floating NAV. Retail funds are defined as those that limit shareholder redemptions to $1 million per day.

Government funds would be limited to Treasuries, but the SEC said that most funds featuring tax-exempt debt sold by state and local governments would qualify as retail funds.

The industry has long fought against moving away from a stable share price, which it says is appealing to investors looking for a safe product.

The second proposal would give fund boards for institutional and retail funds the authority to impose so-called "liquidity fees and redemption gates" during times of stress.

That would give funds the power to stop an outflow of investor money, an idea that the SEC's two Republican commissioners last year said they might be able to support.

Schapiro in a statement applauded the movement on a proposal, but said, "I hope the Commission will remain open to meaningful reform of the entire sector and not just institutional prime funds."

The five commissioners voted unanimously on Wednesday to put the plan out for 90 days of public comment.
...
More: http://www.reuters.com/article/2013/06/05/us-sec-moneyfunds-idUSBRE9540UN20130605
 

Aubuy

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It is interesting that money is becoming something that you can no longer own, it's more like something that has been loaned to you by the central banks, and if they need it back you have to return it.
 

DCFusor

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I believe I saw in this that it won't affect all MM funds, like for example the one my cash is held in for my trading acct at TD Ameritrade. Anyone know for certain?
 

pmbug

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Don't know for sure, but I would guess that money is pooled into one of the "prime funds for institutional investors" mentioned in the article. If you contact TD Ameritrade and ask them, please do let us know what they say...
 

pmbug

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The Fed recently made some noise about increasing bank reserve requirements to avoid a potential bail in:
Federal Reserve Governor Daniel Tarullo ... at a Washington conference on how to handle failing banks. ...

Tarullo spoke at the Fed-sponsored conference as regulators weigh how to avert a repeat of the taxpayer-backed bailouts during the 2008 credit crisis. The Dodd-Frank Act requires large lenders to create living wills to describe how they could be wound down in a bankruptcy. If that doesn’t work, the Federal Deposit Insurance Corp. can step in, liquidate the bank and force losses on shareholders and creditors.

...

Tarullo said that if creditors and counterparties don’t believe the FDIC can successfully manage a resolution, they may misprice risk by assuming a bailout will result.

“If investors and other market actors think the prospects for orderly resolution seem low, they may assume the firm will be rescued by the government, and any moral hazard present in these markets will continue,” Tarullo said in prepared remarks.

...

One critical component, regulators say, is having enough long-term unsecured debt to convert into equity to help absorb losses and keep a distressed bank running until the firm could be sold or dismantled, known as a “bail-in.”
...
http://www.bloomberg.com/news/2013-...-down-plan-so-creditors-don-t-shun-banks.html

A few details on the new Fed requirements:

http://www.huffingtonpost.com/2013/10/24/federal-reserve-liquidity_n_4158388.html
 

Aubuy

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The Fed recently made some noise about increasing bank reserve requirements to avoid a potential bail in:

http://www.bloomberg.com/news/2013-...-down-plan-so-creditors-don-t-shun-banks.html

A few details on the new Fed requirements:

http://www.huffingtonpost.com/2013/10/24/federal-reserve-liquidity_n_4158388.html
Here it comes. Dodd Frank, the law of unintended, or in this case intended consequences. My bank just notified me that if you make more than 6 transfers out of a savings account in the same month, that the account will be closed and converted to a checking account. I wonder at what point they will just say you can't take your money out of a savings account or a checking account. :shrug:
 

pmbug

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The bank bail-in rumble is growing louder. After the events in Cyprus, a small country and potentially meaningless in the eyes of most people, it seems that bail-in idea has spread like a virus across the Western world.

Only in the last week, we saw the following developments:
  • Slovenian parliament has approved bank bail-in rules. (source)
  • The leader of the Eurogroup Working Group (Thomas Wieser) revealed that the eurozone should introduce bank bail-in rules from 2016, as reported by the German Der Spiegel. (source)
  • UK based Co-operative Bank announced a bondholder bail-in rescue plan. (source)

All these events come right after the IMF super tax proposal of 10% on savings accounts of households with a positive net worth in Europe (reported on this site) earlier this month.
...
More: http://goldsilverworlds.com/money-currency/closer-look-at-bank-bail-ins-black-hole-of-our-system/
 

DCFusor

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The savings account transaction rate limit has been around for as long as I can remember - a long time.

The idea was - if you want a checking account, well, have one of those instead. The justification was, well, in a saving's account, the bank needs stability of that as collateral to make money to pay you the interest on it, but has to hold the cash in-hand for checking, however they funge the books.
That one's been around 50+ years I know of, which is why I have both sorts of account, though I keep my FRN's low in all of those - just enough for emergency and daily bread use, a couple months tops.

Liquidity has some value. Lo, these many years back, I was, as always, self-insured, and you don't want to be unliquid if you need to pay. So when I built this building I'm sitting in (well, had it built, then finished it) - I put up the rest of my land, about $175k worth at the time, against a 3 year 26k loan. Even with the overabundance of collateral, that loan took 2.5 months to come through - and the building was done before the money got here - I just didn't want my reserves down too low even for an instant (what good is insurance that can't pay right now?). Of course, I paid that sucker off in a few months - I'm anti-debt - and so am still considered a deadbeat by the bank, since they didn't get to collect their big interest (7%) at a time when the fed had already depressed interest rates considerably (I think mortgages were a lot less at the time, giving me good reason to pay this off quickly).
 

pmbug

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...
A major conference on the future of banking yesterday heard contributions on a European banking union which is being negotiated by Eurozone finance ministers. One of the aspects of that union will be a 'bail-in' of deposits when banks fail in the future. Michael Noonan, Ireland’s Minister for Finance confirmed yesterday that bail-ins or deposit confiscation will be used.

The toolkit underpinning the Single Resolution Mechanism is provided for in the bank recovery and resolution proposal (BRR) which was agreed last June in Council under the Irish Presidency. The proposal provides a common framework of rules and powers to help EU countries manage arrangements to deal with failing banks at national level as well as cross-border banks, whilst preserving essential bank operations and minimising taxpayers' exposure to losses.

One of the main pillars to the BRR framework to facilitate a range of actions by authorities are “resolution tools”. Noonan confirmed yesterday that resolution tools include the sale of business, bridge bank and asset separation tools and also the use of bailins.
...
http://www.goldcore.com/Bail-Ins_An...med_At_Future_of_Banking_in_Europe_Conference
 

pmbug

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That graph isn't entirely accurate. For instance, it shows Canada as a "safe" place when they also have publicized a risk of bail-ins.
 

bushi

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Truth to be told, this while "bail-ins" hoopla, isn't ANYTHING new. It only gets publicity today. But in fact, depositors are NOT depositors, they are unsecured creditors of the bank, as soon as you put anything into "your account".
How else you think they could account for fractional reserve banking, and/or lending indeed - when was the last time, that you have seen your account balance decreased, because the bank has made a loan with "your" deposit money?

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