ARE YOU PREPARED FOR A US BANK BAIL-IN?
Jeff Berwick
Dollarvigilante.com
If you have cash in a US bank, you can expect to have the federal government take it all the next time US banks find themselves in trouble.
The days of the federal government stealing money from taxpayers, or borrowing it from the Federal Reserve, to save troubled banks — as in they did in the 2008 crisis — may be over. Congress is considering imitating the theft in Cyprus and letting troubled banks “bail-in” depositor money in order to make themselves solvent.
Jim Sinclair, chairman and chief executive officer of Tanzania Royalty Exploration Corp., and whose family started Goldman Sachs, Salomon Brothers, Lehman Brothers, and others, has been warning of this for a while.
“Bail-ins are coming to North America without any doubt, and will be remembered as the ‘Great Leveling,’ of the ‘great Flushing’. Not only can it happen here, but it will happen here…It stands on legal grounds by legal precedent both in the US, Canada and the UK.”
Financial expert Michael Snyder adds, “When major banks fail, they are going to bail them out by grabbing the money that is in your bank accounts. This is going to absolutely shatter faith in the banking system and it is actually going to make it far more likely that we will see major bank failures all over the Western world.”
This news isn’t exactly new, but the story is still developing, the monetary system is much closer to collapse and the bail-in is imminent. In fact, US banks presented the Federal Reserve with a bail-in plan to pay for large banks’ restructuring in the event of a future crisis, The Wall Street Journal reports. The plan was presented to the US Federal Reserve in an attempt to preempt tougher rules from the regulators.
The private meeting was reportedly attended by officials from Wells Fargo & Company, Bank of America Corp, Citigroup Inc. and several other banks. The bail-in mechanism would be designed to place a greater burden on creditors, as opposed to the taxpayers (theft victims), in the event of a bank’s collapse. In addition to the fleecing of depositors in Cyprus, the burden keeping a bank afloat was put on bondholders already this year when the UK’s Co-operative bank unveiled a rescue package that forced the bank’s bondholders to take a £1.5 billion hit to plug the £1.5 billion hole in the bank’s balance sheet.
The proposal presented to Federal Reserve officials would involve the largest financial-services holding companies would be willing to hold a certain amount of debt and equity which would be used to prop up any failed bank subsidiary seized by regulators, but the regulators will likely stick to their own plans which involves more aggressive measures including capping bank-size, breaking-up institutions or forcing banks to take on more long-term debt.
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