Tag Archives: bail-in

New Zealand Banks “Pre-positioning” For Cyprus-Style Bail-In

15 Jul

New Zealand has joined with Europe, the USA, the UK, Canada, and Australia, in preparing to “bail-in” its banks.

Excerpted from Timeline For “Bail-In” Of G20 Banking System:

JUNE, 2013 – Reserve Bank of New Zealand releases its Open Bank Resolution (OBR) Pre-positioning Requirements Policy, stating that the OBR provides the flexibility to assign losses to creditors (meaning, bank depositors):

Reserve Bank of New Zealand, Open Bank Resolution (OBR) Pre-positioning Requirements Policy, June 2013 (click to enlarge)

Reserve Bank of New Zealand, Open Bank Resolution (OBR) Pre-positioning Requirements Policy, June 2013 (click to enlarge)

In Definitions, the OBR states that “‘Customer account’, ‘customer liabilities’, or ‘customer liability accounts’ are unsecured liabilities of the bank represented by a range of products such as cheques, savings and other transactional accounts and including term deposits, and that these are considered “in-scope for pre-positioning”:

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The OBR further states that “The Implementation Plan is a key part of the documented evidence that pre-positioned arrangements to quickly close the bank, freeze a portion of customers’ claims to meet potential losses, and reopen the next business day and continue banking services, are in place”:

Click to enlarge

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The first requirement for “Pre-positioning” is stated as being “That the bank can be closed promptly at any time of the day and on any day of the week, freezing in full all liabilities and preventing access by customers and counterparties to their accounts”:

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New Zealand’s version of the FSB-directed bank “bail-in” regime appears even worse than the rest of the West.

Unlike the others, New Zealand does not even have the pretence of a “government guarantee” or “deposits insurance” scheme for small depositors.

From Voxy.co.nz –

“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”

Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr Norman said.

“OBR is not in line with Australia, which protects bank deposits up to $250,000.

Unfortunately, all the “deposit insurance” schemes in the West are not worth the paper they are(n’t) written on.

Cleverly, the FSB’s new G20 “bail-in” regime reclassifies customer deposits as “equity” in the failing bank, or, in a new “bridging” bank (ie, “recapitalisation”). This makes the customer’s “stake” — formerly a deposit — in that “new” bank liable for forfeiture.

More on this in future posts.

New Zealand lawyers Buddle Findlay have a helpful explanation of the unique way the kiwi OBR scheme will work:

In practice what has happened in Cyprus is very similar to what the OBR Policy is asking New Zealand banks to preposition for here. In essence, as in Cyprus:

Deposits of up to an undetermined amount (called “the de minimis”) may be protected in a bank failure (or, as in Cyprus, potentially a banking system failure); and

Amounts over the de minimis can be frozen in whole or in part (the RBNZ call this the “haircut”) and these amounts are effectively used to absorb losses in the failed bank or, as in Cyprus, banks.

The table below shows how the freeze would work but picks a much lower de minimis balance than the €100,000 ultimately agreed as politically acceptable in Cyprus – which seems to be consistent with the RBNZ’s intentions to have a relatively low de minimis.

Buddle Findlay lawyers, New Zealand 'Open Bank Resolution' scheme (click to enlarge)

Buddle Findlay lawyers, New Zealand ‘Open Bank Resolution’ scheme (click to enlarge)

See also:

G20 Governments All Agreed To Cyprus-Style Theft Of Bank Deposits … In 2010

Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget

The Bank Deposits Guarantee Is No Guarantee At All

Timeline For “Bail-In” Of G20 Banking System

14 Jul

This-Is-What-It-Feels-Like-To-Have-Your-Life-Savings-Confiscated-By-The-Global-Elite

How did it happen?

How did we come to a place where an unknown, unelected body of bankers and bureaucrats — chaired since its inception by former Goldman Sachs men — has duped the G20 heads of government into endorsing a scheme to “bail-in” the insolvent private sector banking system by stealing the savings of taxpayers?

Financial Stability Board: Key Attributes of Effective Resolution Regimes for Financial Institutions, October 2011 (click to enlarge)

Financial Stability Board: Key Attributes of Effective Resolution Regimes for Financial Institutions, October 2011 (click to enlarge)

How did we come to a place where the European Union, the UK, the USA, Canada, and now Australia and New Zealand, have all begun implementing a new regime for “addressing the problem” of “moral hazard” associated with government bail outs for “too-big-to-fail” financial firms — supposedly “without exposing the taxpayer to the risk of loss” — by stealing the savings of taxpayers?

FSB – G-SIFI, Nov 4, 2011 (click to enlarge)

FSB – G-SIFI, Nov 4, 2011 (click to enlarge)

Here is the timeline to date (click the links to verify original sources):

FEBRUARY, 1999 – Following recommendations by then President of the Deutsche Bundesbank (German central bank) and later the Vice-Chairman (2003-present) of the Board of Directors of the Bank for International Settlements (BIS), Hans Tietmeyer, G7 Finance Ministers and Central Bank Governors endorse the creation of a new body, the Financial Stability Forum (FSF). It is funded by the BIS, and based in Basel, Switzerland.

Former Goldman Sachs vice chairman and managing director, and now President of the European Central Bank (ECB), Mario Draghi, is appointed the first chairman of the FSF. Its stated purpose is to promote stability in the international financial system“:

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30 MAY, 2006Chairman and CEO of Goldman Sachs from 1999-2006, Henry “Hank” Paulson, appointed Secretary of the Treasury by George W. Bush. During his tenure at Goldman, it became a major player in the creation and sale of collateralised debt obligations (CDO’s), including subprime mortgage-backed securities ($135 billion from 2001-2007). A tax loophole introduced under former President George HW Bush enables Paulson to meet the conflict of interest preconditions for assuming a government position, by “divesting” most of his $700 million fortune in Goldman Sachs’ stock, tax-free.

During Paulson’s first 15 months as Secretary of the Treasury, Goldman Sachs sells $30 billion in toxic mortgage products to pension funds, foreign banks and other investors (including a 59% increase in 2006), and makes billions betting against its own products. In 2006 and 2007, as the housing bubble bursts, Goldman distributes $22.3 billion in year-end profit-sharing rewards to its 31,000 employees and $112 million in bonuses to Paulson’s successor, Lloyd Blankfein.

15 SEPTEMBER, 2008Lehman Brothers files for bankruptcy; credit crunch; stockmarket panic; Global Financial Crisis:

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21 SEPTEMBER, 2008 – On a Sunday, Goldman Sachs is authorised to change its investment bank status, and becomes a traditional bank holding company, thus making it eligible for bailout funds.

26 SEPTEMBER, 2008 – French President Nicholas Sarkozy says “we must rethink the financial system from scratch”.

29 SEPTEMBER, 2008 – USA’s House of Representatives rejects the $700 billion Wall Street bank bailout bill promoted by Secretary of the Treasury, Henry Paulson. Dow Jones Industrial Average (DJIA) index plummets 777 points:

2ED1-CB-DowFallsOver700

1 OCTOBER, 2008 – US House of Representatives agrees to “bail out” Wall Street’s too-big-to-fail (TBTF) banks, passing amended Emergency Economic Stabilization Act, including the Troubled Assets Relief Program (TARP) enabling the government to purchase up to $700 billion in “toxic assets” such as mortgage-backed securities (derivatives) from private sector banks. Despite being a prime cause of the subprime meltdown, Goldman Sachs is the largest individual recipient of public funds ($12.9 billion) from the bailout of insurance giant, AIG, makes $2.9 billion from “proprietary trades” on its own AIG account, and receives a further $10 billion directly from the US Treasury as an “investment” in preferred stock:

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7 OCTOBER, 2008 – World Bank President Robert Zoellick calls for “a new multilateral network for a new global economy”, says that “We will not create a new world simply by remaking the old”.

13 OCTOBER, 2008 – British Prime Minister Gordon Brown says “We must create a new international financial architecture for the global age”, and that “We are proposing a world leaders’ meeting in which we must agree the principles and policies for restructuring the financial system across the globe”.

15 NOVEMBER, 2008 – First ever summit meeting for heads of government of the Group of Twenty (previously, a G20 summit of Finance Ministers and Central Bank Governors held since 1999). Titled the “Leaders Summit on Financial Markets and the World Economy”, the Washington Summit agrees on an “Action Plan” for financial market reform. It includes an expansion of the Financial Stability Forum to include emerging countries such as China:

Los-Cabos-g20summit

2 APRIL, 2009 – G20 London Summit Declaration on Strengthening the Financial System gives the freshly renamed Financial Stability Board (FSB) a “broadened mandate” and “enhanced capacity”:

FSB_broadenedmandate

8 NOVEMBER, 2010 – FSB report to the G20 Progress since the Washington Summit on the Implementation of the G20 Recommendations for Strengthening Financial Stability states that “Good progress has been made in defining a policy framework to address the moral hazard risks posed by systemically important financial institutions (SIFIs)”, and that “The FSB is submitting to the G20 Seoul Summit a set of recommendations and timelines for implementation of this framework”:

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Within the “recommendations”, for the first time the spectre of “bail-in” of banks is formally (though blink-and-you-miss-it briefly) mentioned —

“…higher loss absorbency could be drawn from a menu of viable alternatives and could be achieved by a combination of capital surcharges, contingent capital and bail-in debt:

FSB_Update_bail-in

11-12 NOVEMBER, 2010 – G20 Seoul Summit endorses “the policy framework, work processes and timelines proposed by the FSB to reduce the moral hazard risks posed by systemically important financial institutions (SIFIs) and address the too-big-to-fail problem”, “without… exposing the taxpayers to the risk of loss”:

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4 NOVEMBER, 2011 – Former Goldman Sachs co-head of sovereign risk and managing director of investment banking, chairman of the Bank for International Settlements’ Committee on the Global Financial System, and Governor of the central Bank of Canada, Mark Carney, is appointed the new chairman of the Financial Stability Board. He replaces fellow Goldman Sachs alumnus and current European Central Bank President, Mario Draghi.

4 NOVEMBER, 2011 – FSB states that “the development of the critical policy measures that form the parts of this framework has now been completed. Implementation of these measures will begin from 2012:

FSB_Implementation_from_2012

The FSB’s Key Attributes of Effective Resolution Regimes for Financial Institutions expressly identifies “bail-in” of banks as one of the “powers” that must be given to a single “Resolution authority” for each nation (G20) or jurisdiction (EU):

Financial Stability Board: Key Attributes of Effective Resolution Regimes for Financial Institutions, October 2011 (click to enlarge)

Financial Stability Board: Key Attributes of Effective Resolution Regimes for Financial Institutions, October 2011 (click to enlarge)

In the preamble, it is stated that one of the objectives is to make it possible for “unsecured and uninsured creditors to absorb losses”:

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Each nation or jurisdiction is required to set up a “Resolution authority”, which is to be “responsible for exercising the resolution powers over firms…”:

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The Resolution authority is to be given power to “transfer or sell assets and liabilities, legal rights and obligations, including deposit liabilities and ownership in shares, to a solvent third party,”without consent:

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Key Attribute 3.3 clearly states that any transfer of a bank’s assets or liabilities (ie, deposits) by the Resolution authority “should not require the consent of any interested party or creditor to be valid”, and, that any such action will not be deemed a “default” of the bank’s legal obligations –

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25 JUNE, 2012 – Government of Cyprus requests bailout from the EU, due to losses in its banking system associated with the Greek debt crisis.

10 DECEMBER, 2012 – A joint paper by the Federal Deposit Insurance Corporation (USA) and the Bank of England (UK) titled Resolving Globally Active, Systemically Important, Financial Institutions states that “the authorities in the United States (U.S.) and the United Kingdom (U.K.) have been working together to develop resolution strategies that could be applied to their largest financial institutions”:

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FDIC and BoE: Resolving Globally Active, Systemically Important, Financial Institutions, December 2012 (click to enlarge)

FDIC and BoE: Resolving Globally Active, Systemically Important,
Financial Institutions, December 2012 (click to enlarge)

It further identifies that “This work has taken place in connection with the implementation of the G20 Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions”:

FDIC and BoE: Resolving Globally Active, Systemically Important, Financial Institutions, December 2012 (click to enlarge)

FDIC and BoE: Resolving Globally Active, Systemically Important,
Financial Institutions, December 2012 (click to enlarge)

The paper explains that its focus is “the application of ‘top-down’ resolution strategies that involve a single resolution authority applying its powers to the top of a financial group”, and how such a strategy could be implemented “for a U.S. or a U.K. financial group in a cross-border context”:

FDIC and BoE: Resolving Globally Active, Systemically Important, Financial Institutions, December 2012 (click to enlarge)

FDIC and BoE: Resolving Globally Active, Systemically Important,
Financial Institutions, December 2012 (click to enlarge)

With regard to the USA, it explains that “the strategy has been developed in the context of the powers provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and that such a strategy would “assign losses to shareholders and unsecured creditors (meaning, bank depositors):

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With regard to the UK, it explains that “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 that the 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”:

FDIC and BoE: Resolving Globally Active, Systemically Important, Financial Institutions, December 2012 (click to enlarge)

FDIC and BoE: Resolving Globally Active, Systemically Important,
Financial Institutions, December 2012 (click to enlarge)

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The paper expressly identifies the origin of the “framework” for the bail-in strategy as being the FSB —

“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”:

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14 MARCH, 2013Reserve Bank of New Zealand releases draft Open Bank Resolution policy, which includes “bail-in” for failing banks using depositors’ money.

16 MARCH, 2013 – Cypriot Government agrees to EU-imposed conditions for receiving bail out funds, terms which include “bail-in” of Cypriot banks using depositors’ savings.

Cyprus is widely seen as a template for similar actions throughout the EU and the world. Forbes magazine states that “A new strategy has been unveiled around the world, with the first test run in Cyprus. Despite early denials, the ‘bail-in’ strategy for insolvent banks has already become official policy throughout Europe and internationally as well.”

21 MARCH, 2013 – Canadian Government’s Economic Action Plan 2013 states that “The Government proposes to implement a ‘bail-in’ regime for systemically important banks”, aimed at recapitalising failing banks by “the very rapid conversion of certain bank liabilities into regulatory capital”. It further states that “This will reduce risks for taxpayers”:

Canada Budget 2013 Economic Action Plan, March 21, 2013, page 145 (click to enlarge)

Canada Budget 2013 Economic Action Plan, March 21, 2013, page 145 (click to enlarge)

14 MAY, 2013 – Australian Government Budget 2013-14 Portfolio Budget Statement for the Australian Prudential Regulation Authority identifies implementation of the FSB-directed bank bail-in regime as a key strategic objective for 2013-14 —

“consolidate the prudential framework by enhancing prudential standards where appropriate, in line with the global reform initiatives endorsed by the G20 and overseen by the Financial Stability Board:

page 134, Portfolio Budget Statements, Australian Prudential Regulation Authority, Australian Government Budget 2013-14, 14 May 2013 (click to enlarge)

page 134, Portfolio Budget Statements, Australian Prudential Regulation Authority, Australian Government Budget 2013-14, 14 May 2013 (click to enlarge)

20 MAY, 2013 – The European Parliament’s Economic and Monetary Affairs committee issues a press release stating that “The case in Cyprus showed how important it is to have clear procedures for making shareholders, bondholders and ultimately depositors foot the bill”.

Bank of England deputy governor Paul Tucker says that draft EU bank rescue laws would be a milestone towards “a global system”.

JUNE, 2013 – Reserve Bank of New Zealand releases its Open Bank Resolution (OBR) Pre-positioning Requirements Policy, stating that the OBR provides the flexibility to assign losses to creditors (meaning, bank depositors):

Reserve Bank of New Zealand, Open Bank Resolution (OBR) Pre-positioning Requirements Policy, June 2013 (click to enlarge)

Reserve Bank of New Zealand, Open Bank Resolution (OBR) Pre-positioning Requirements Policy, June 2013 (click to enlarge)

In Definitions, the OBR states that “‘Customer account’, ‘customer liabilities’, or ‘customer liability accounts’ are unsecured liabilities of the bank represented by a range of products such as cheques, savings and other transactional accounts and including term deposits, and that these are considered “in-scope for pre-positioning”:

Click to enlarge

Click to enlarge

The OBR further states that “The Implementation Plan is a key part of the documented evidence that pre-positioned arrangements to quickly close the bank, freeze a portion of customers’ claims to meet potential losses, and reopen the next business day and continue banking services, are in place”:

Click to enlarge

Click to enlarge

The first requirement for “Pre-positioning” is stated as being “That the bank can be closed promptly at any time of the day and on any day of the week, freezing in full all liabilities and preventing access by customers and counterparties to their accounts”:

Click to enlarge

Click to enlarge

27 JUNE, 2013 – The European Union agrees on “bail-in” rules as part of the Bank Resolution and Recovery Directive.

1 JULY, 2013 – Mark Carney appointed to a second term as chairman of the FSB; also becomes Governor of the Bank of England.

3 JULY 2013 – The Financial Times warns that the EU’s newly agreed ‘Bank Resolution and Recovery Directive’ “swings Europe from one extreme – a system laden with implicit government guarantees that protected bank creditors from bearing losses – to the other”, and “risks old-style bank runs”.

************

To be continued…

Observant readers will note that the G20 heads of government endorsed the FSB’s “recommendations” (Seoul, Nov 2010) a full year before the FSB actually completed their “framework”, and finally documented that the power to bail-in the banks using depositors’ savings would be a requirement (“Key Attributes…”, Nov 2011). Prior to this, the only reference to the possibility of bail-in (with no mention of depositors) was one obscure, and very brief, reference in the FSB’s 2010 “Progress…” report to the G20 Seoul Summit; the report on which the G20 leaders based their decision to formally endorse, and implement, the yet-to-be-completed FSB framework —

“…higher loss absorbency could be drawn from a menu of viable alternatives and could be achieved by a combination of capital surcharges, contingent capital and bail-in debt.”

Amidst all the celebrity shoulder-rubbing, champagne, caviar, and photo ops, I wonder how many of the G20 leaders actually read the document, much less noticed that tiny part.

Or — if any of them did — if any had the first clue what it meant.

See also:

G20 Governments All Agreed To Cyprus-Style Theft Of Bank Deposits … In 2010

Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget

But The Sheep Don’t Scatter: Banks Say “Sophisticated” Customers Have “Less Stable” Deposits

The Bank Deposits Guarantee Is No Guarantee At All

Think You’ve Got Cash In The Bank? Think Again

EU Confirms Plan For Cyprus-Style Theft of Bank Deposits

6 Jul

As warned here repeatedly…

G20 Governments All Agreed To Cyprus-Style Theft Of Bank Deposits… In 2010

Federal Reserve Governor Confirms – Bank Depositors Will Be Cyprused

Growing Political Deception On Bank Deposits Theft

The Bankers’ Net Is Closing

Federal Reserve Says Bank Bail-Ins Coming To The USA

… the internationalist banksters’ plan to set up a global regime for “resolution” of failing banks, wherein governments will give themselves free reign to “bail-in” the banks using depositors’ savings, is now slowly but surely being enacted by governments worldwide.

From The Telegraph (UK):

EU makes bank creditors bear losses as Cyprus bail-in becomes blue-print for rescues

New European Union “bail-in” rules to impose the losses of failed banks on shareholders, bondholders and some large depositors were agreed early this morning by Europe’s finance ministers.

…Jeroen Dijsselbloem, the chairman of the Eurogroup of finance ministers, hailed the agreement as a major step towards a “banking union” and away from state funded aid to recapitalise or bailout troubled banks across Europe.

…Greg Clark, the financial secretary to the Treasury, declared that Britain was happy with the new rules after securing concessions allowing governments flexibility on how to tailor bank “resolution” to national circumstances and existing British arrangements on banking levies.

…Under the deal, after 2018 bank shareholders will be first in line for assuming the losses of a failed bank before bondholders and certain large depositors. Insured deposits under £85,000 (€100,000) are exempt and, with specific exemptions, uninsured deposits of individuals and small companies are given preferred status in the bail-in pecking order for taking losses.

It is most important to recall what we have shown previously.

Do not be fooled into believing that, because Australia’s government has “guaranteed” (ie, insured) bank deposits up to $250,000, that this means your savings are safe, and that a failing Aussie bank will not be “bailed-in” using your money.

The government’s “guarantee” is limited, to just $20 billion per failed bank.

That’s less than one-tenth of the total amount of customer deposits — digital bookkeeping entries — actually “held” by Australian banks.

(see The Bank Deposits Guarantee Is No Guarantee At All )

To the best of my knowledge, Australia’s politicians have not yet begun to legislate the new, FSB-mandated and G20-agreed bank “bail-in” regime here.

But when they do, your savings will be exposed to confiscation.

Just as intended:

Earlier on Monday, Bank of England Deputy Governor Paul Tucker said the EU law on bank recovery and resolution would be a milestone towards a global system.

Federal Reserve Says Bank Bail-Ins Coming To The USA

26 Jun
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On April 1st, this blog broke the full story of how G20 Governments All Agreed To Cyprus-Style Theft Of Banks Deposits … In 2010.

In recent days, numerous alternate media outlets have reported that Federal Reserve board member Jeremy Stein has confirmed this at an IMF-sponsored conference.

From Anglo Far East:

Please find a review of some data from a recent speech by a central banker that reinforces the rapid approach of “bail-ins”.

Link to download PDF of Jeremy Stein speech

The speech by Federal Reserve Board Member Jeremy Stein at an IMF-sponsored conference focused on “too big to fail” (TBTF) banks and “systemically important financial institutions” (SIFIs).

Stein said: “First, and most obviously, one goal is to get to the point where all market participants understand with certainty that if a large SIFI were to fail, the losses would fall on its shareholders and creditors, and taxpayers would have no exposure.”

And from gold proponent Jim Sinclair:

Bail-in is coming faster then we know. For god’s sake protect yourself. Come to the Q&A.

Governor Jeremy C. Stein
At the “Rethinking Macro Policy II,” a conference sponsored by the International Monetary Fund, Washington, D.C.
April 17, 2013

“First, and most obviously, one goal is to get to the point where all market participants understand with certainty that if a large SIFI (Significantly Important Financial Institutions) were to fail, the losses would fall on its shareholders and creditors……”

It is worth reviewing this blog’s report of April 1st for the full details of the BIS-funded, FSB-directed plan to steal your bank deposits when our banks begin to go under.

To “enable authorities to resolve failing financial firms in an orderly manner without exposing the taxpayer to the risk of loss.”

Conveniently ignoring that bank deposit holders are taxpayers too.

The Bankers’ Net Is Closing

25 Jun

a-tug-towing-a-tuna-cage-betwe-2

MacroBusiness’ chief economist Leith van Onselen, aka Unconventional Economist, has today posted a video clip from CNBC featuring one Stephen Cecchetti, economic advisor to the Bank for International Settlements (BIS). The context of the interview is the recent annual report from the BIS warning against continued “stimulus” by the world’s central banks (my bold emphasis added):

“What we are saying is not that there needs to be immediate austerity, but that the trajectories, the long run health of the balance sheets of the governments in many of the advanced industrialised economies is pretty bad at this point; that with aging populations and with commitments that have been made to the elderly for pension and health care, that the debt that’s created by governments is going to skyrocket, and before it does that they need to implement reforms. Now what this means is that you have to worry about the long run…”

Note the use of the term “trajectories”. This is precisely the description that has been used by our own Barnaby Joyce in making the same warning, since late 2009.

However, that is not the primary point I wish to make here.

What most captured my attention on reading the Unconventional Economists’ post, was the title he chose.

“Are central banks living on borrowed time?”

Presumably this is referring to the BIS’s warning that central banks cannot continue “printing” monetary “stimulus”. But I see a deeper, if unintended truth in that title. I suggest that it might be interpreted literally.

It would not surprise this blogger in the least to see a global scenario begin to play out at some point in the not-too-distant future, one somewhat similar to the following abbreviated plot line:

1. GFC 2.0 — stock markets crash, global credit “squeeze”, economic collapse, mass bank failures.

2. Attempted “bail-in” to “save” banks using account holders’ deposits; proves insufficient, governments “have” to assist anyway.

3. Government balance sheets continue to explode with unsustainable debt; those (like Australia) not yet underwater are now drawn into the maelstrom.

4. Austerity measures plus unemployment lead to social chaos, war/s, etc.

5. Central banks increasingly blamed for (a) failing to foresee trouble, (b) poor interest rate settings leading to high debt levels, thus causing the crisis, and (c) excessive money “printing” in failed attempts to restore the economy.

6. Growing calls for Public Central Banking; (ie) the end of fractional reserve banking, and of “independent” central banks.

7. Under the “guidance” of a Grand Plan designed by a “neutral”, global body — the BIS, IMF, etc — national governments take over control of the money supply in their country — or region.

8. The BIS, IMF etc establish a new “global reserve currency”, that each national / regional currency must be linked to — for “financial stability”.

This scenario is not so far-fetched as some may imagine.

Already there are increasing numbers of “experts” and other august entities arguing for point #6. Perhaps the most prominent example being the IMF’s 2012 paper, “The Chicago Plan Revisited”:

IMF’s epic plan to conjure away debt and dethrone bankers

One could slash private debt by 100pc of GDP, boost growth, stabilize prices, and dethrone bankers all at the same time. It could be done cleanly and painlessly, by legislative command, far more quickly than anybody imagined.

The conjuring trick is to replace our system of private bank-created money — roughly 97pc of the money supply — with state-created money.

We return to the historical norm, before Charles II placed control of the money supply in private hands with the English Free Coinage Act of 1666.

Specifically, it means an assault on “fractional reserve banking”. If lenders are forced to put up 100pc reserve backing for deposits, they lose the exorbitant privilege of creating money out of thin air.

The nation regains sovereign control over the money supply.

And if the sovereign has lost (or loses) control over itself, due to that sovereign debt “trajectory”?

The real question we might ask ourselves is, “Who or what would really control the ‘money’ supply then?”

For my part, the long history of predatory incursions on national sovereignty by the IMF in particular, is reason sufficient to vigorously oppose any idea or suggestion that comes from within their ranks.

Or the BIS ranks.

Remember, it is thanks to the Financial Stability Board (FSB) — an entity under the auspices of the BIS — that the G20 Governments All Agreed To Cyprus-Style Theft of Bank Deposits … In 2010.

The speed with which the FSB co-opted the agreement of the world’s politicians, granting the FSB the power to design a new regulatory system for achieving “financial stability” — in April 2009, mere months after ‘Peak Fear’ in October 2008 — should cause any critically-thinking person to wonder whether this has come about entirely by “unforeseen” accident, or by design.

UPDATE:

With thanks to reader Kevin Moore, the following clip offers some insight into why supposedly “neutral”, harmless, above-politics, centralised global bodies such as the IMF, BIS, World Bank et al, should never be trusted –

UPDATE:

MacroBusiness contributor Greg McKenna, aka Deus Forex Machina, says that central bankers appear to be coordinating their language, and potentially causing increased negative sentiment, in the midst of the present global stock market falls (my bold emphasis added) –

Central banks want stocks lower

“With so many Fed Governors talking this week I thought we would get soothing words from them so as to not spook the market any further than it had already been but in the release from the BIS over the weekend, in the statement from the PBOC yesterday and in comments from two senior Fed Governors overnight I see almost the exact opposite to what I had expected.

Clearly there is a global central bank compact that has emerged which says that stock and property market bubbles are not the way to get a sustainable cure to the economic woes of the globe…”

Could it simply be that certain people now want the markets (thus, economies) to crash?

Growing Political Deception On Bank Deposits Theft

4 Jun

Truth-Lies

On All Fool’s Day 2013, this blog published the exposé — since cross-posted on globalresearch.ca — that G20 Governments All Agreed to Cyprus-Style Theft Of Bank Deposits In 2010.

It is telling to observe how politicians (and the media) worldwide are using the deceitful art of sophistry to obscure this truth.

As they all begin to pass the necessary legislation to enact what they have already agreed to — in secret, without providing clear and transparent advice to the public — they are seeking to subtly imply that these measures are needed as a result of what happened in Cyprus.

When the truth is, little Cyprus was just the first test case for implementing the Goldman Sachs-headed internationalist Financial Stability Board’s new bank “bail-in” regime, agreed to by all G20 Prime Ministers and Presidents nearly 3 years ago.

Ponder carefully the emphasised passage in the following Reuter’s news story:

EU draft bank rescue law would not shield big deposits

(Reuters) – A draft law that a group of European Union lawmakers voted for on Monday would shield small depositors from losing their savings in future bank rescues, but customers with more than 100,000 euros in savings when a bank failed could suffer losses.

A group of lawmakers in the European Parliament’s economics committee overwhelmingly voted that, from 2016, large depositors in the EU might suffer losses if a bank gets into serious trouble. The plan was similar to a deal in Cyprus, where wealthy depositors at two banks took hits to save the country from bankruptcy.

Under the EU proposal, a bank would dip into large deposits of over 100,000 euros once it had exhausted other avenues such as shareholders and bondholders. But deposits under 100,000 euros would be spared.

“The case in Cyprus showed how important it is to have clear procedures for making shareholders, bondholders and ultimately depositors foot the bill,” a press release from the committee said after the vote.

See what I mean? The Cyprus “bail-in” test case, deceitfully used as an example of why governments supposedly need to pass legislation for “similar” actions in their own countries … legislation that they already agreed to pass anyway, nearly 3 years ago.

EU finance ministers agreed last week that large, uninsured depositors should be subject to losses but some countries may still seek some flexibility on how they wind down their banks.

The “finance ministers” agreed, “last week”?

This is a deception.

As shown previously, the Prime Ministers and Presidents of the G20 nations all agreed to the policy framework laid down by the Financial Stability Board (FSB) at the Seoul G20 Summit, way back in 2010.

A framework that explicitly includes “bail-in” of banks, using the deposits (i.e, savings) of bank “creditors”:

“Carry out bail-in within resolution as a means to achieve or help achieve continuity of essential functions…”

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There is something else that is very important to note.

The FSB, politicians, bankers, and bureaucrats all want you to believe that these new procedures might only place at some risk the savings of so-called “large” or “big” depositors.

This is untrue.

The FSB-recommended “powers” for the G20 nations’ new bank “resolution authorities” exhibit Orwellian deception and moral relativism at their finest. Embedded within their recommended “Safeguards”, is a caveat allowing those “resolution authorities” to act with impunity when it comes to the theft of depositors’ money:

“Resolution powers should be exercised in a way that respects the hierarchy of claims while providing flexibility to depart from the general principle of equal (pari passu) treatment of creditors of the same class…”

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In other words, whether you have more than (say) 100,000 Euro/Dollars/Pounds deposited in a bank, or less, it is recommended (by Goldman Sachs’ FSB) that G20 governments legislate powers enabling their “resolution authorities” the “flexibility” to treat you any way they see fit.

“Equal treatment” is only a “general principle” to these people.

You may be wondering, if G20 governments all agreed to this way back in 2010, then why are we only now seeing nations from Canada to Europe beginning to draft and pass bank “bail-in” legislation, behind a smokescreen of lies and deceit?

As can be seen from the FSB press release of November 2011:

“Implementation of these measures will begin from 2012. Full implementation is targeted for 2019.”

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Some nations’ politicians are simply moving faster than others, in the coordinated drive towards the ultimate goal of stealing your savings, in order to “bail-in” so-called “systemically important” banks:

Earlier on Monday, Bank of England Deputy Governor Paul Tucker said the EU law on bank recovery and resolution would be a milestone towards a global system.

Infographic: Shattering The Illusion Of “Guaranteed” Bank Deposits

20 Apr

It takes a bit to shock your humble blogger these days. But as a very ‘visual’ kind of person, if something is going to shock, then a powerful image is usually it.

Courtesy of “Oto”, brilliant architect of the demonocracy.info website, comes this stunning infographic.

It shows just why the US Federal Deposit Insurance Corporation’s (FDIC’s) “promise” to insure American bank depositors is a monstrous illusion.

Now please note, Australians should dismiss this as representing only an American problem at their own peril.

As shown previously, the Australian government’s Bank Deposits Guarantee Is No Guarantee At All … for the same reasons. That is, the total of funds that has been allocated to “insure” or “guarantee” the deposits of Aussie bank customers, is barely 1/10th of the amount of deposits actually “owned” by depositors.

And all the other risk factors shown in this infographic – including galactic derivatives exposures – apply here too:

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An even more detailed and informative version of this infographic is displayed at Oto’s website.

Federal Reserve Governor Confirms – Bank Depositors Will Be Cyprused

20 Apr

Recently your humble blogger pointed out the original source documents proving that G20 Governments ALL Agreed To Cyprus-Style Theft Of Bank Deposits … In 2010.

Today, we draw your attention to a speech from Governor Jeremy C Stein of the Federal Reserve Bank just 3 days ago, confirming that US bank depositors will be Cyprused:

I will focus my remarks today on the ongoing regulatory challenges associated with large, systemically important financial institutions, or SIFIs. In part, this focus amounts to asking a question that seems to be on everyone’s mind these days: Where do we stand with respect to fixing the problem of “too big to fail” (TBTF)? Are we making satisfactory progress, or it is time to think about further measures?

I should note at the outset that solving the TBTF problem has two distinct aspects. First, and most obviously, one goal is to get to the point where all market participants understand with certainty that if a large SIFI were to fail, the losses would fall on its shareholders and creditors, and taxpayers would have no exposure.

Errr … as we keep saying, creditors of banks (ie, the depositors) ARE taxpayers.

…if .. a SIFI does fail, the orderly liquidation authority (OLA) in Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act now offers a mechanism for recapitalizing and restructuring the institution by imposing losses on shareholders and creditors.

Mohamed El-Erian was right.

Cash out while you still can.

If The CIO Of The World’s Biggest Bond Fund Doesn’t Trust The Global Banking System, Why Do You?

19 Apr

From CNN Money (h/t MacroBusiness reader “Mav”):

When Wall Street nearly collapsed

Would panic prevail? That was the question gripping the world in the days surrounding the fall of Lehman Brothers on Sept. 15, 2008. One year after that terrifying Monday, the people who struggled to cope with the financial crisis share what they were thinking as chaos broke out.

Mohamed El-Erian: Hit the ATMs

mohamed_el-erian

Chief Executive and Co-Chief Investment Officer of PIMCO

On the Wednesday and Thursday after Lehman filed for Chapter 11, I asked my wife to please go to the ATM and take as much cash as she could. When she asked why, I said it was because I didn’t know whether there was a chance that banks might not open. I remember my wife sort of pausing and saying, “Are you serious?” And I said, “Yes, I am.” We had long felt that the world was increasingly in disequilibrium, and by March of 2008 we decided that things were critical and that the unthinkable was thinkable…

The firm had been preparing for catastrophe for a long time, but even so, there was a sense of apprehension because things were accelerating very, very quickly.

See also:

* Think You’ve Got Cash In The Bank? Think Again
* Our Banking System Operates With Zero Reserves
* The Bank Deposits Guarantee Is No Guarantee At All
* G20 Governments ALL Agreed To Cyprus-Style Theft Of Bank Deposits … In 2010
* The World’s Most Immoral Institution Tells You How

Infographic: Cyprus Bank Deposits Confiscation

5 Apr

With thanks to “Oto”, creator of the superb demonocracy.info, comes this infographic on Cyprus:

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Do check out the higher resolution version – with even more info – at demonocracy.info

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