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  1. #1
    I see trees of green
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    CONFISCATION SCHEME: The plan for U.S. and U.K. Depositors

    Maybe it's time to get into the guillotine business.


    The Confiscation Scheme Planned for U.S. and U.K. Depositors - Truthdig

    Can They Do That?

    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. (See here and here.) 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.

  2. #2
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    The document differentiates between usnecured creditors and depositors(and there differentiates between insured and uninsured deposits). Seems like a case of misreading to me

  3. #3
    Ricardo Cabeza
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    I think I mentioned something at some point here about fractional reserve banks being inherently insolvent.

    This is a logical extension of that fact.

    anyone who has more than a few months worth of expenses sitting in a bank account at this point is a fool.
    Whenever the legislators endeavour to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people who are thereupon absolved from any further obedience, and are left to the common refuge which God hath provided for all men against force and violence - John Locke

    SuperAndy's Garage

  4. #4
    I see trees of green
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    Quote Originally Posted by coreyb View Post
    The document differentiates between usnecured creditors and depositors(and there differentiates between insured and uninsured deposits). Seems like a case of misreading to me
    You've read the full article?

    I've used the Acrobat Pro search function to try to locate that differentiation in the document that applies to the U.S.. For the U.K., I did find a differentiation in part 34 of the "U.K. regime" but where in the document does it differentiate or show an exception for insured deposits in the U.S.?

    Resolving Globally Active, Systemically Important, Financial Institutions.

    U.K. regime

    34 The U.K. has also given consideration to the recapitalization process in a scenario in which a G-SIFI’s liabilities do not include much debt issuance at the holding company or parent bank level but instead comprise insured retail deposits held in the operating subsidiaries. Under such a scenario, deposit guarantee schemes may be required to contribute to the recapitalization of the firm, as they may do under the Banking Act in the use of other resolution tools. The proposed RRD also permits such an approach because it allows deposit guarantee scheme funds to be used to support the use of resolution tools, including bail-in, provided that the amount contributed does not exceed what the deposit guarantee scheme would have as a claimant in liquidation if it had made a payout to the insured depositors. That is consistent with the contribution requirement that is already imposed on the Financial Services Compensation Scheme in the U.K. in the exercise of resolution powers10 and simulates the losses that would have been incurred by those deposit guarantee schemes during bank insolvency. But insofar as a bail-in provides for continuity in operations and preserves value, losses to a deposit guarantee scheme in a bail-in should be much lower than in liquidation. 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.

  5. #5
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    Quote Originally Posted by TerminatorX91 View Post
    You've read the full article?
    No, gave up early on the article and moved onto the report
    Quote Originally Posted by TerminatorX91 View Post
    I've used the Acrobat Pro search function to try to locate that differentiation in the document that applies to the U.S.. For the U.K., I did find a differentiation in part 34 of the "U.K. regime" but where in the document does it differentiate or show an exception for insured deposits in the U.S.?
    So just start with that simple search. If they are using that terminology(calling depositors depositors, not creditors), why would they suddenly switch mid report? It makes little sense. Then take a look at item 47, for example
    47 Similarly, because the group remains solvent, retail or corporate depositors should nothave an incentive to “run” from the firm under resolution insofar as their bankingarrangements, transacted at the operating company level, remain unaffected. In order toachieve this, the authorities recognize the need for effective communication to depositors,making it clear that their deposits will be protected.
    More broadly, though, the entire point of the report is to figure out a way to minimize the impact on the broader economy. Seizing deposits would cause massive panic

  6. #6
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    This article makes a lot of stretches of reason. I do not have the time to read all of the multitude of self-referential links contained therein, but, to start, I don't agree with their arbitrary conflation of a bank's senior unsecured debtholders and regular retail depositors.

    The FDIC-BOE report even explicitly states, "Insured depositors themselves would remain unaffected."

    It is worth noting that the Cypriot banks essentially existed as money laundering vehicles for wealthy Russians looking to avoid keeping their cash on deposit in their homeland.

    US banks' size relative to their economy is far more modest.

    Of course, if one argues like Andy69 that the entire modern system of banking and currency is unstable and likely to collapse -- well, maybe. But I do not know what I would do if that were the case. Pieces of linen paper with dead presidents on them will not be worth very much in the wake of massive global collapse, either, will they?

    To stay sane, I have to choose to believe that the overall system is likely to remain solvent and that we will have to deal with specific crises in specific locales as we progress.

  7. #7
    I see trees of green
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    Quote Originally Posted by Argentius View Post
    This article makes a lot of stretches of reason. I do not have the time to read all of the multitude of self-referential links contained therein, but, to start, I don't agree with their arbitrary conflation of a bank's senior unsecured debtholders and regular retail depositors.

    The FDIC-BOE report even explicitly states, "Insured depositors themselves would remain unaffected."

    It is worth noting that the Cypriot banks essentially existed as money laundering vehicles for wealthy Russians looking to avoid keeping their cash on deposit in their homeland.

    US banks' size relative to their economy is far more modest.

    Of course, if one argues like Andy69 that the entire modern system of banking and currency is unstable and likely to collapse -- well, maybe. But I do not know what I would do if that were the case. Pieces of linen paper with dead presidents on them will not be worth very much in the wake of massive global collapse, either, will they?

    To stay sane, I have to choose to believe that the overall system is likely to remain solvent and that we will have to deal with specific crises in specific locales as we progress.
    It says "Insured depositors themselves would remain unaffected" in section 34 that starts with "The U.K." and falls under the title "U.K. approach to single point of entry resolution strategy", not "U.S. approach to single point of entry resolution strategy".

    Section 47, as coreyb points out, may be the save.

    I appreciate the point about choosing to believe to stay sane though I see a risk for crossing over the precipice into denial. First, I don't associate Truthdig with disseminating complete junk. Plus, with this week's signing into law the Farmer Assurance Provision AKA "Monsanto Protection Act" in HR 933, I'm not so sure what I should choose to believe.

  8. #8
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    Like you said, the brief summary report is not especially explicit, it is the outline of a couple of plans.

    But, the SIFI's in question are to be wound down under the auspices of the FDIC, which is an institution created with the EXPRESS PURPOSE of insuring deposits, under the regulations set forth in Dodd-Frank, expressly written to protect consumers from financial institutions.

    I haven't read the details of the agriculture bill, a subject for another thread, but, I am pretty concerned as well.

    Quote Originally Posted by TerminatorX91 View Post
    It says "Insured depositors themselves would remain unaffected" in section 34 that starts with "The U.K." and falls under the title "U.K. approach to single point of entry resolution strategy", not "U.S. approach to single point of entry resolution strategy".

    Section 47, as coreyb points out, may be the save.

    I appreciate the point about choosing to believe to stay sane though I see a risk for crossing over the precipice into denial. First, I don't associate Truthdig with disseminating complete junk. Plus, with this week's signing into law the Farmer Assurance Provision AKA "Monsanto Protection Act" in HR 933, I'm not so sure what I should choose to believe.

  9. #9
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    Quote Originally Posted by Argentius View Post



    It is worth noting that the Cypriot banks essentially existed as money laundering vehicles for wealthy Russians looking to avoid keeping their cash on deposit in their homeland.

    .
    Again, I can't make this add up. If the majority of depositors are Russian, why the near riot behavior of the natives? Are there that many Russians visiting Cyprus?

    I'm suspicious that, while the banks may well be used for money laundering, the scope of this confiscations reach both closer to home and far beyond Russia.

    Please do provide us with your source of information that restricts impact to Russians.

  10. #10
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    swift solo : the Cypriot banks' capitalization sources are not exactly secret .

    sure, Cypriot nationals would feel pain too 1- cypress has an insufficient deposit insurance scheme, and plenty of middle class Cypriots support and live off of the economy created by the money brought there.

    the point is that this situation is unique to cypress. a United States banking crisis would look very different and have different cures

  11. #11
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    I was not suggesting that a run on the banks is imminent in the US. I was questioning the argument that only Russian depositors will be hurt by the EU decision as other have suggested.

    This decision has more far reaching implications than the aborted local attempt to do the same thing. It is an endorsement of a policy by the entire EU and could be the first of many account confiscations in troubled EU countries. It will be interesting to see the response of depositors in those other countries. It is my guess that the EU has just stepped in it.

    Quote Originally Posted by Argentius View Post
    swift solo : the Cypriot banks' capitalization sources are not exactly secret .

    sure, Cypriot nationals would feel pain too 1- cypress has an insufficient deposit insurance scheme, and plenty of middle class Cypriots support and live off of the economy created by the money brought there.

    the point is that this situation is unique to cypress. a United States banking crisis would look very different and have different cures

  12. #12
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  13. #13
    waterproof*
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    The US has no need to seize citizen's savings accounts; we can simply continue spewing more money into the banker's pockets. Cyprus is unable to do that.
    * posted by Creakybot 2013 all rights reserved.
    * not actually waterproof.

  14. #14
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    Half of America won't have any savings to be taken away anyways. Not to worry.

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