Cyprus: 10% Savings confiscation

[rocketdog]

Ben Bernanke says bank account confiscation "unlikely" in America (ya gotta wonder if the Cypriots would have said the same thing a few years back):

http://www.youtube.com/watch?v=PUhViGIM ... r_embedded

[cnh]

At the end of the day, if it's labeled a "tax," the Feds can take whatever they want, however they want.  The Supreme Court decision on Obamacare effectively determined that.

[rocketdog]

At the end of the day, if it's labeled a "tax," the Feds can take whatever they want, however they want.  The Supreme Court decision on Obamacare effectively determined that.

As Supreme Court Justice John Marshall once said:

"The power to tax is the power to destroy."

[AgAuMoney]

At the end of the day, if it's labeled a "tax," the Feds can take whatever they want, however they want.  The Supreme Court decision on Obamacare effectively determined that.

The constitution does not grant unlimited taxing power, but only two types of tax.

16th amendment jurisprudence is a mess and this decision seemingly did not do anything to help.  However, the bottom line from the 16th amendment cases is that income tax falls into the allowable taxes.  Thus the obamacare tax used that history to decide the case, in that the obamacare tax is an income tax.

What would be interesting is if congress or the executive branch decides that they can tax greater than 100% of income, because that is the only way that I can see they could go after accounts using any stretch of currently understood constitutional authorization.

[rocketdog]

Jim Rogers: Taking People’s Bank Accounts Is Going To Happen

http://www.youtube.com/watch?feature=pl ... TpI6_xzSFo

[MachineGhost]

Jim Rogers: Taking People’s Bank Accounts Is Going To Happen

http://www.youtube.com/watch?feature=pl ... TpI6_xzSFo

Years ago, he also said the Fed was going to implode.  I think he's just a doom porner.

[AgAuMoney]

Sounds like Cyprus is now set to take over 60% of uninsured funds.

From the Russians?

Hmm.

[Libertarian666]

Jim Rogers: Taking People’s Bank Accounts Is Going To Happen

http://www.youtube.com/watch?feature=pl ... TpI6_xzSFo

Years ago, he also said the Fed was going to implode.  I think he's just a doom porner.

So the Fed implosion isn't going to happen? Whew, it is a relief to know that economic law has been overturned!

[moda0306]

Jim Rogers: Taking People’s Bank Accounts Is Going To Happen

http://www.youtube.com/watch?feature=pl ... TpI6_xzSFo

Years ago, he also said the Fed was going to implode.  I think he's just a doom porner.

So the Fed implosion isn't going to happen? Whew, it is a relief to know that economic law has been overturned!

What economic law?  The Austrian one that states that anything that doesn't stem from the individual is not only morally vacuous but also horribly unsustainable?

I kid .

[smurff]

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 US Federal Deposit Insurance Corporation and the Bank of England dated December 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.

March 28 article.
I guess it can happen here.

Apparently the plan is to convert the funds in bank accounts into equity in the failing bank.  In other words, stock worthless from day one.  FDIC can't really insure the TBTF banks, so this is what they came up with. 

http://www.alternet.org/economy/think-y ... paging=off

[MachineGhost]

!@#%ing brilliant.  It will cause bank runs, not prevent them.  And now this:

This changes the picture completely. This move reflects either criminal incompetence or abject corruption by the Fed. Even though I’ve expressed my doubts as to whether Dodd Frank resolutions will work, dumping derivatives into depositaries pretty much guarantees a Dodd Frank resolution will fail. Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. So this move amounts to a direct transfer from derivatives counterparties of Merrill to the taxpayer, via the FDIC, which would have to make depositors whole after derivatives counterparties grabbed collateral. It’s well nigh impossible to have an orderly wind down in this scenario. You have a derivatives counterparty land grab and an abrupt insolvency. Lehman failed over a weekend after JP Morgan grabbed collateral.

But it’s even worse than that. During the savings & loan crisis, the FDIC did not have enough in deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had to get more funding from Congress. This move paves the way for another TARP-style shakedown of taxpayers, this time to save depositors.

http://www.nakedcapitalism.com/2013/03/ ... tives.html

[AgAuMoney]

I thought the FDIC & BoE paper was interesting in that it was very explicit that the U.K. insurance program would protect insured amounts for depositors but skim the uninsured amounts.  It said nothing about FDIC insured amounts vs. uninsured amounts.

Then in a later section (para47 I think it was) it talked about how communication with depositors would be important to prevent bank runs by assuring them their deposits were safe.

Well obviously, in the U.K. their deposits were only safe in limited amounts and explicitly NOT SAFE in other amounts.  It seems to me the assurance would be simply spin, and not an actual promise.

So where in the paper did you see any part of the plan to protect any FDIC insured deposit?  To me it is glaring in its absence.  Instead we see it mentioned that the law was already changed in the U.S. to allow what was needed for the documented plan.

I do not find any of that paper to be the least bit reassuring and I previously was a fan of the FDIC insurance (with its implicit congressional guarantee).

[AgAuMoney]

Oh I don't know... maybe because they took for granted that people reading it would know 12 USC § 1821. 

You miss the entire point of the FDIC & BoE paper.

The U.K. law regarding deposit insurance is as clear as is the U.S. law, yet the paper was explicit that the U.K. insured deposits would be protected, and the U.K. law needed to change.

When reading ANY legal document, what it does NOT say is equally as important as what it DOES say.

And the document does NOT say U.S. depositors insured amounts will be protected.

Officially, depositors are simply unsecured creditors.  The paper clearly explained how unsecured creditors are to be treated.

[AgAuMoney]

1.  The paper is not a law.  Nor an agreement to be turned into a law.

The paper is a proposal for action, explicitly intended to comply with the law.  That is why it is important to note what the paper says about the law, and what it does not say.

2.  If and when you do read a legal document, the corpus is just as important.  You can 'fill it in' however you want, but if the law actually states otherwise, pointing to the omission in that document as proof positive that what you just assumed was right seems a bit backwards don't you think?

I agree with your immaterial point about legal documents complying with the law.

And back to the topic at hand.  Yes, depositors are unsecured creditors.  And in accordance with the preferential treatment of depositors specified in the law, the depositor claims can be subject to write downs.

That's the key point.

Either the law allows depositor-creditors to be "dinged" by a write down, or it requires they be made whole, or it leaves it up to the FDIC determination.  (or the law is contradictory or unspecified)

It sounds like you believe the law allows depositors to be "dinged", in essence leaving it up to FDIC determination.

That agrees with my understanding, and with the explicit claims in the FDIC paper.  Which paper, thru omission, clearly makes no promises regarding the FDIC intent.

As for why the UK was specifically called out,...  any rule allowing the liquidation bank to bail-in claimants needs to explicitly state that only depositors are protected.

Why does the U.K. law need to be changed if specification on a rule would suffice?

The FDIC paper clearly states that U.K. depositors will be protected but only up to the insured amount.  Do you believe that agrees with the current requirement in the U.K. law?

[rocketdog]

Rather than start a new thread, I'm posting this here since I already referenced another Jim Rogers interview earlier.  In a nutshell, Jim Rogers says: 'I Suspect They’ll Take the Pension Plans Next; I for One am Worried, and I'm Taking Preparations'

http://lewrockwell.com/rogers-j/rogers-j182.html

Perhaps it's "doom porn", but it would be a tough nut to swallow if he turns out to be right.