Bank Holiday coming?

Monday, July 16, 2012
By Paul Martin

Changing the laws for easier looting

Banks fail

Typically, when a bank fails the depositors stand to lose all their deposits. This was fixed in the US by better banking regulation and the FDIC.

But please be aware that financial regulation is now for all practical purposes NON-EXISTENT if you are a major bank.

The FDIC is an insurance company. Insurance companies can fail too. In fact, the FDIC could easily find itself swamped with just a few big bank failures.

Then what?

Theoretically, Congress would appropriate more funds to cover the shortfall.

But what if the failure is systemic and swamps the ability of the Treasury to cover the losses?

In that case, we go back to the way it has been since the beginning of time: when the bank fails, the depositors eat it.

New dollars? New Euros? I don’t think so, but that’s always possible.


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