Did The Fed Signal The Inevitability Of The Next Banking System Collapse? – Dave Kranzler
TND Guest Contributor: Dave Kranzler
TheNewsDoctors.com
Wed, May 4th, 2016
Like a Mafia Don protecting his “family,” the Fed is implementing another layer of “protection” from collapse for the Too Big To Fail Banks. This latest deal will prevent bank counter-parties from pulling collateral from a collapsing bank. The installation of this law is a warning signal that the global banking system is barreling toward another devastating financial collapse.
The cover story for this scheme is that it will prevent another “Lehman” event from taking down the entire financial system. But it wasn’t Lehman, per se, that caused the 2008 collapse. Bear Stearns lit the fuse, Lehman was selectively thrown into the explosives mix and AIG/Goldman sprayed napalm into the explosion.
My source for this information of this is this article from Bloomberg: More Fed Protection For Big Banks. I had to read the article carefully a few times to fill-in between the lines, as Bloomberg kept referencing the new rule as a “proposal” and either white-washed or misrepresented the facts.
The new rule will prevent the TBTF bank counter-parties from taking their collateral away from the bank when the bank is collapsing. When a fund enters into a derivatives trademushroomcloud1with a bank the fund is required to put up collateral, generally in the form of Treasuries. The bank is then free to hypothecate that collateral, or make use of it for its own purpose. But if the bank collapses and the fund is in a “winning” position on its derivatives trade with the bank, it’s in the fund’s best interest to withdraw its collateral. The new Fed rule will prevent this. The rule extends beyond derivatives, to securities lending agreements and repo transactions. But the truth is that this Fed rule is aimed squarely at derivatives.
The implementation of this new regulation, at best, extends the bail-in concept to TBTF “big boy” counter-parties, like hedge funds, insurance companies and pensions. Thewellspring for this new banking rule is the Financial Standards Board, a key policy arm of the BIS. The FSB is the entity that drafted the bail-in regulation, which has been largely implemented in Europe. Bail-in regulations are now methodically being installed in the U.S. banking system.
The Rest…HERE
