Instead of taxpayers bailing “out” the big banks, they’ll just take depositor’s money which is called a “bail-in”. Ellen Brown author of Web of Debt wrote about bail-in’s, which is the opposite of a bankruptcy where the bank would be liquidated to free up their assets to pay off their creditors. A bail in liquidates the creditor’s instead to keep the bank alive. Seems a bit one sided to me. It would be like if I took on enormous debt and then was facing a melt down and have the ones I owe the money to bail me out because I wasn’t a good money manager. The language in our current laws refers to this as an “orderly resolution”. and this does appear in Dodd-Frank, which surprised me. We’re supposed to feel comforted that if Wall Street risks it all and fails...again, we won’t be on the hook to bail them out. It’s what’s left unsaid that we should be worrying about. Where the fear is most prevalent is with the derivative schemes where all the debtor’s and creditor’s are intertwined, so they are using this to keep these risky banks alive rather than regulate the risk. It is apparent to me that they’d rather allow the bankers to rip off the public rather than regulate their risky behavior. So, if Bank of America or Wells Fargo, etc should get into trouble like they did in 2008, their customers (depositors) would then be at risk of having their funds seized by the banks? Apparently our money becomes the property of the bank and we are issued what amounts to an IOU when we make a deposit to checking or savings. Those that hold extremely risky derivatives get their money first, so share holders and depositors get the shaft with depositors last in line for reimbursement. So, FDIC? That fund currently has $67 Billion to insure over $6 Trillion, with a credit line to the Treasury of $500 Billion, but that is a loan and who will pay the loan back? Us. So if bank depositors are last in line to be reimbursed, you do the math. Derivatives are currently estimatedd at over $100 Trillion, more than the GDP of the entire planet. In 2008 the FDIC had an over run of just $8 Billion and that almost broke the small banks. So, could it be that this is also a means to an end for larger banks to take over the rest of the small banks?
Glass-Steagall that was passed into law in the 1930’s placed a wall between investment and depositor banking which would have prevented this situation since it separated depositor’s money from investment banking. Once Glass-Steagall was repealed in 1999 it exposed your checking and savings accounts to huge risks, especially since we seem to lack the political will to regulate the banks. In fact, since the crash of 2008 we did almost nothing unlike the steps taken after the crash of 1929 which kept banking safe for over 50 years. The larger bankers are apparently even exempt from criminal prosecutions. So, the big banks are allowed to gamble with your money and then if they fail you lose not them. How is that right? So, many States and Cities who bank could also be bankrupted should these banks fail.
Now many Credit Unions are being placed in jeopardy because the big banks want their depositor’s money? Why are our politicians willing to place all of our personal and public money at such an extreme risk? Because if derivatives are allowed to collect first, they would literally take all the money from the FDIC then take your money and the deposits of States and Cities bankrupting almost the entire country in order to save a few gamblers? That is an insane policy that’s already started to take effect in Europe. The “orderly resolution” needs to be repealed because they are destabilizing the entire system in order to protect a few people and banks from themselves.
State run public banks like that in ND, which the WSJ said is more profitable than JP Morgan Chase should be in all the states. 50% of the cost of infrastructure projects is the financing so it makes sense for States to have public banking that would not only bring them a profit (lower taxes for residents) but would also lower the costs of conducting the State’s business and certainly protect themselves and their employee’s pension accounts. They could then loan money to small business and earn interest rather than pay it. A win/win.