Oh, I lost my Chautauqua on Good Friday where I wondered how in the world in atheists nations we all come to party on Good Friday and Easter. We shut down everything (except the Federal Government in the USA), and we can't really do business; so we party.
Can It Happen in the USA (or Canada)?
For several days I've written about
Cypress in my blog, facts (as I knew them), and asking if it could happen in
the USA. Now lots of analysts are asking the same thing. Let me introduce
you to Ellen Brown.
http://seekingalpha.com/article/1306931-it-can-happen-here-the-confiscation-scheme-planned-for-u-s-and-u-k-depositors?source=email_macro_view&ifp=0
"Confiscating the customer
deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few
eurozone "troika" officials scrambling to salvage their balance
sheets. A joint paper by the U.S. Federal Deposit Insurance Corporation and the
Bank of England dated Dec. 10, 2012, shows that these plans have been long in
the making; that they originated with the G20 Financial Stability Board in
Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title
to the banks of depositor funds."
The following is from::
http://www.fdic.gov/about/srac/2012/gsifi.pdf
"The financial crisis that began in 2007 has driven
home the importance of an orderly resolution process for globally active,
systemically important, financial institutions (G-SIFIs). Given that challenge,
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. These strategies have been designed to
enable large and complex cross-border firms to be resolved without threatening
financial stability and without putting public funds at risk. 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."
"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. These strategies should be sufficiently robust to
manage the challenges of cross-border implementation and to the operational
challenges of execution."
There is no indication that any
amounts insured by the FDIC would be protected in the case of a Bank going
bankrupt. This cannot even be remotely considered an oversight as the
FDIC is co-authoring this paper. The German's, specifically in the
original Cypress deal, insisted on "private sector participation"
which translated by someone (me) far away suggests someone other than the
Central Banks need to take losses. As I stated yesterday, this approach
started with the "Greece Haircut".
Since I cannot substantiate any
claims of illegal activity on behalf of the Banks in the USA, I can only ask
you: is there any indication in the USA banking system that would put the
depositors in even a worse position than what is happening in Cypress?
May I suggest you do some research on how certain large banks (start with
BofA) passed their stress test, when just a few months before, almost none of
them could. Why would that be of interest? Start with remembering Lehman
brothers which started the fiscal panic in 2007-08.
When Lehman failed unsecured
creditors -- notice that bank depositors are unsecured creditors -- received 8
cents on the dollars invested with Lehman. And now, this... The
depositors in these large banks (BofA, CitiBank, etc) are not even senior
creditors (read that FDIC document).
The reason that Lehman investors
were senior creditors was that derivatives counter-parties require collateral
for any exposures. The 2005 bankruptcy reforms made
derivatives counter-parties senior to unsecured lenders (remember that?,
you don't? Guess what these things come back to haunt).
In late 2011, Bank of America moved
a huge percentage of its derivatives from Merrill Lynch operations to
its depository. Why? Bloomberg: "Bank of America Corp. (BAC), hit by a credit downgrade last
month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush
with insured deposits, according to people with direct knowledge of the
situation…"
In June 2012, Bloomberg
was reporting that BofA's holding company was holding almost $75 trillion
(TRILLION?) of derivatives according to the OCC. Approximately $53
Trillion were within Bank of American parent. (This is the notional value
of the trades.)
Is BofA the only one?
Bloomberg: "That (BofA) compares with
JPMorgan's deposit-taking entity., JPMorgan Chase Bank which contained 99 % of
the NY firm's $79 Trillion of notional derivatives."
Hello Houston,
NY, Guantanamo we got a problem. There would appear to be
something very wrong (legally) with the Federal Reserve, the FDIC and any other
oversight of Bank's doings. The 2005 bankruptcy law revisions move
derivatives counter-parties to first in line; i.e., they grab the
assets firsts (which just happens it could be your deposits if you bank with
one of these folks).
Does this mean that this could be
tantamount to shifting transfer of derivative risk from Merrill Lynch to the
taxpayer via the FDIC? If you understood that question at all, you would
conclude first Derivatives of a Bank would be covered, then the FDIC (funded
via of taxpayer money) would have to make good on all deposits up to $250,000.
Revisiting Lehman again, then.
First, in any scenario from one of these Too Large To Fail Banks, and it
is impossible to imagine an orderly shutdown as the
derivative counter-parties grab for the assets. That leads to
abrupt insolvency.
Lehman over one weekend became insolvent after JP
Morgan grabbed the collateral.
Let go back further to the savings
and loan crises. FDIC did not have enough in deposit insurance receipts
to pay Resolution Trust Corporation wind-down vehicle. The FDIC had to
receive emergency funding from Congress.
http://en.wikipedia.org/wiki/Savings_and_loan_crisis
OK, I can't help think of Valdimer
Putin (Russia)
"The Central Bank was not just a bank but a regulator of the
financial system and the main institution of state macroeconomic policy, he
said." Oh, my dear enemy, you are able to
be honest about it at least. Folks, can you observe
central planning and control by Finance?
Let me end this part of the
dialogue and encourage you to read Ellen Brown's article. What I've said above
is covered in detail in her article. Please keep this in mind also.
Any decent Academic study of the FDIC (where it is not being paid for the
Banks or the Government) concludes the FDIC is woefully underfunded in case
even one of these TBTF banks fail.
Yes, folks, it appears the Banks in
the USA are fully positioned to do much more than Cypress did, and it will fall
onto the taxpayer to cover if a Bank becomes illiquid from super derivatives
(as it did in Spain, Greece, Cypress and soon to be other countries in Europe.)
I would also like to state again
and again. What is happening is not attributable to Republicans or
Democrats stand alone. That means centralize TBTF banks happened under
every President since the monster from Jekyll Island was created. Who are
the foxes that putting in the laws for limiting access to the Hen House? (Hello! Paulson - hello Goldman Sachs,
Geithner - only banking job was federal Reserve, Jack Lew - hello Citigroup)
