Not just Cyprus! Who Else Has Plans To Grab Small Depositor Savings To Bail Out Failing Big Banks?

[sabrina 1]

Maybe it is time for people to take any money they still have out of savings accounts in any of the Big Banks, especially since there is virtually nothing to gain from lending them your money anymore in terms of interest. And now, after the outrageous attempt to set up yet another scheme to make ordinary people pay for any failures of the Big Banks, it seems to me that it is very risky to trust even ten dollars to these Banks.

This article explains the 'old order' of protection for depositors where people were protected UP TO a certain amount of money.

http://www.golemxiv.co.uk/2013/03/plunderball-the-new-euro-banking-game/

Plunderball – The new Euro banking game

It used to be that below the guarentee limit your money was safe. It was only any amount above the guarantee, that you could lose in a restructuring. When a bank went under the normal bankruptcy rules swung into action (I’m leaving aside the TBTF gorilla in the room. Let’s not poke him just yet).TBTF aside – the collapsed banks’ assets would collected in into a pile and all the bank’s creditors (those who bought its debt, lent it money, put their money into it) would be put on a list in order of seniority, with share holders at the bottom, unsecured and Junior bond holders next with Senior insured bond holders at the top. Depositors were always ranked up there with Senior bond holders. Those at top would get most if not all of their money back and not take a loss, those at the bottom would lose everything.

The article goes on to explain how that system worked and then claims that the system has now been completely 'torn up' using Cyprus as an example.

So what now? What happens in this new disorder?

Well it turns out other countries have been preparing to enforce this same – ‘force losses on all depositors’ – idea. New Zealand, as reported in an article by interest.co.nz has been working on what it calls its new Open Bank Resolution Policy (OBR). If put in place – and that is the NZ government’s intention,

The implementation of OBR would see all unsecured liabilities that rank equally among themselves, including deposits, having a portion frozen

Link to the story of NZ's Open Bank Resolution (OBR) here:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10872361
Risk To Savings If Bank Fails

The article links to Zero Hedge's story on how Spain is also considering this kind of scheme to help bail out the banks if they fail again. And it goes on to show that Italy may also have similar plans.

And what about the UK and the US? Well, if Europe and NZ are in on the scheme is there any doubt that Britain and the US are not planning on forcing the people to once again bail out Wall Street Failures? This author thinks so:

And that is what I think is being planned in the UK and USA.

Will the UK and USA also go for the automatic seizure of money from accounts? My guess is they have been quietly planning on it but will now think twice about admitting to it. Preferring to keep it quiet until the next collapse when ‘circumstances call for desperate measures’ etc etc.

The reality is the banks are still bust – even the ones making huge profits – and when – not if – when the next bubble bursts and one bank starts to bring down another – they will all come for your money and we will all be collectively punished in order to make sure the wealthy and the powerful stay that way.

Emphasis mine.

It's not as if they have not done this already, just in a different way. As pointed out in these articles, there is never going to be an end to these bailouts or to the people footing the bill.

So when, as Occupy has asked, are we going to start seeing them being allowed to fail, and then begin the process of prosecuting the criminals?

The world never needed a movement like Ocuupy Wall Street than it does right now. Because it is obvious that most Governments are not on the side of the people. And that is why Wall St hates Occupy. They bought governments and thought they were clear to keep robbing the people, but then OWS appeared on the scene and to them, it was not just a big threat, it appears to have been the only threat to their criminal activities.

[Tuesday Afternoon]

1. DU Rec

[AndyA]

2. The interest paid on savings and CDs is insulting

Another area where Congress favors the big banks, and says "screw you" to the American people. Credit card interest rates charged and savings/CD interest rates should be tied together. There is no incentive for people to save when they get nothing in return, meanwhile the big banks make a fortune.

Cut the CEO's salary and perks and bump up the interest rates. This is yet another area where market competition flat out doesn't work, because they all work together to charge higher rates on credit cards, yet offer next to nothing for savings and CDs.

Enough already!

[Benton D Struckcheon]

3. This has to do with the repeal of nationwide usury laws,

posted this before but one more time:

Usury statutes in the United States
Each U.S. state has its own statute which dictates how much interest can be charged before it is considered usurious or unlawful.
If a lender charges above the lawful interest rate, a court will not allow the lender to sue to recover the debt because the interest rate was illegal anyway. In some states (such as New York) such loans are voided ab initio.[44]
However, there are separate rules applied to most banks. The U.S. Supreme Court held unanimously in the 1978 Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp. case that the National Banking Act of 1863 allowed nationally chartered banks to charge the legal rate of interest in their state regardless of the borrower's state of residence.[45] In 1980, Congress passed the Depository Institutions Deregulation and Monetary Control Act. Among the Act's provisions, it exempted federally chartered savings banks, installment plan sellers and chartered loan companies from state usury limits. Combined with the Marquette decision that applied to National Banks, this effectively overrode all state and local usury laws.[46][47] The 1968 Truth in Lending Act does not regulate rates, except for some mortgages, but requires uniform or standardized disclosure of costs and charges.[48]
In the 1996 Smiley v. Citibank case, the Supreme Court further limited states' power to regulate credit card fees and extended the reach of the Marquette decision. The court held that the word "interest" used in the 1863 banking law included fees and, therefore, states could not regulate fees.[49]
Some members of Congress have tried to create a federal usury statute that would limit the maximum allowable interest rate, but the measures have not progressed. In July 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act, was signed into law by President Obama. The act provides for a Consumer Financial Protection Bureau to regulate some credit practices but has no interest rate limit.[50]

The single most important thing the Congress can do is set nationwide usury limits.

[sabrina 1]

7. Thanks for that information.

But when did the Banks stop giving interest on savings and on CDs? This was one of the few ways ordinary people could make something on their savings, now unless they want to gamble on Wall St. they make pretty much nothing on savings or CDs.

Some of the comments on the articles linked in the OP are interesting. One eg, thinks the Banks do not want the 'little people's' money as it costs them to manage it. I know so little about finances and am really only beginning to try to figure out how it all got so bad, for us while the wealthy are doing better than ever.

I agree that Congress needs to pass laws setting limits on usury practices. You would think there would already be such a law in this country

[Benton D Struckcheon]

10. Ten year Treasuries are @1.91%

That's risk free money, and even going out 10 years you'd only make 1.91% a year on it. Banks aren't going to take your money for more than that. Why should they? It would be senseless.
The other side of the coin is something that can be done something about however. With rates this low, there's no reason for credit cards to be charging double-digit interest rates to people with good credit scores, except that there are no usury laws in place to prevent it.

[sabrina 1]

11. Well, one reason is profits for the Banks I suppose. I just reread your

first comment re the history of interest rates on credit cards. I blame Congress as it seems that any time anyone does try to do something about controlling those rates, it doesn't get much support in Congress. And this leads back to the influence on our entire system of Wall Street. There is no way any member of Congress who is actually representing the people would not see the need to pass a federal usury law as you suggest. That says to me that they do not represent the people for the most part.

One question though, probably a very ignorant one as, as I said, I know nothing about finances. But wrt to this:

With rates this low, there's no reason for credit cards to be charging double-digit interest rates to people with good credit scores, except that there are no usury laws in place to prevent it.

How are interest rates on Credit Cards tied to interest on Savings and/or CDs?

And again, why is interest so low, even as you point out, on Treasury Bonds? Do banks no longer need depositors? And if not, why not?

[Benton D Struckcheon]

15. I don't want to totally hijack this so I'll start a new thread on usury itself,

however, to answer your question, the rate banks are going to either give you on a deposit or charge you on a loan is tied to what they can get risk free via buying and selling Treasuries.
You have to put yourself in the shoes of a banker. Would you give a customer more for his deposit than you could make on a Treasury, given that with the Treasury bond you know the term of the deposit, that is, if you buy a 10 year, you've got that money for those ten years, whereas if the banker takes a deposit from you, he'd have to guess how long you keep it with him.
Unless of course you buy a cd, and there of course the rate is going to be tied to Treasuries, as they aren't going to give you much more than what they could get from buying a Treasury. Unless they desperately need cash for some reason. In that case you have to ask yourself a very sensible question: why do they need my cash that badly? You may not want to give it to them if it looks too good to be true.

My basic rule for everything is this: every basis point (one hundredth of a point) you make over the prevailing Treasury you make because there is some risk you're taking. You have to think this way, especially today. Those rates may seem too low, but if someone offers to pay you more for your money than the prevailing Treasury rate for the term (one year, two year, whatever) it's because they're taking some risk with that money. In the case of a bank it's lending your money on to credit card customers, homebuyers, and so on.
Interest rates are a measure of risk. The more you make over Treasuries the more risk you're taking. Most people don't realize this. Burn that into your brain. It's valuable information.

[Benton D Struckcheon]

21. Thread started

http://www.democraticunderground.com/10022559963

[sabrina 1]

43. Thanks, I get it now, you explained it very clearly.

But didn't banks pay a lot more in interest on savings not so long ago? Wasn't it possible to get about 3% or more on savings, or so I have been told

And if that is the case, was that because US Treasury Bonds were getting more interest at that time?

the rate banks are going to either give you on a deposit or charge you on a loan is tied to what they can get risk free via buying and selling Treasuries.

One commenter to the article linked in the OP said s/he thinks the banks are trying to get rid of their small depositors because the cost of managing those accounts is too high. Do you think that is the case? You do say that they use deposit money as loans for mortgages and credit card holders so it does seem as if they do need all the deposits they can get.

I will check out your OP in GD and thanks for taking the time to explain all this to me, I appreciate it.

[rwsanders]

26. Probably when they were allowed to invest in the stock market...

I just realized this while reading some of the posts. I'm not a financial expert, far from it, but if the rates on savings are very low, then people are more willing to risk the stock market. Since banks can now invest there and it is easier to game the system, it makes sense for them to drive people to put their money there.

[sabrina 1]

36. I think you nailed it. Just like they are trying to get their hands on the SS

fund to keep the Wall St. Gambling Casino running. I am sure people are doing this with small amounts of money, and it's a shame. I wonder how many have already lost their savings trying to make a little profit.

[Thor_MN]

12. My nephew asked me to co-sign a small student loan.

It was from the bank where I have one of my accounts. They were going to charge him 10% interest. They pay me less than 1%. I gave him the $2000 outright.

[littlewolf]

20. that is good of you ... however it didn't help his credit rating. nt

[Thor_MN]

24. You think a 10% interest rate is good for him?

He has other loans, he got married at the end of December, his credit rating is better not having the additional debt. Of all of my sibling's children, he is in the best financial shape at this point in his life.

[littlewolf]

31. true I might have let him get the loan and then

given him the 2k to pay it off in 31 days. I have done that for myself
a couple of times.

[Thor_MN]

32. He has other loans.

He does not need another to establish his credit history. Feel free to do whatever you want with your own nephew.

[Sirveri]

47. It's a student loan. NEVER take a student loan.

Can't discharge it, ever, I would never co-sign for a student loan. Regular loan, no problem, student loan, you're on your own.

I would sooner take out a second mortgage, and then act as the loan provider to my kid than have them take a student loan that they stand a good chance of never getting out from under.

[abelenkpe]

28. You did your nephew a huge favor!

10 percent loan and the burden of debt is not worth the "better credit rating" baloney.

You did good.

[sabrina 1]

35. I think that was a great decision.

[JDPriestly]

23. Actually, the extremely low interest rates are just an alternative

method for pushing the burden of bailing out the banks on ordinary, middle-class depositors and savers.

The bank gets lots of interest on the loans it gives to borrowers, has costs that are minimal thanks to automation and pays as close to zero on investments as possible.

[BadgerKid]

25. Yes, and while dividend-paying stocks are yielding a bit more.

A lot more in some cases. I wonder if banks are just investing in the stock market for what's largely been a sure thing since 2009.

[AnotherMcIntosh]

4. K&R

[rhett o rick]

5. Moving our money can help but probably not stop them from getting it in the end.

I dont see a solution for this. The bailouts just propped up the world banking Ponzi Scheme for a while longer.

[sabrina 1]

13. The only way to keep them from getting our money seems to be to

keep it at home. Isn't that what people did during the Depression?

:hi Rhett!

[rhett o rick]

27. There is a risk of course of theft. But also, would paper money be best?

I think during the First Great Republican Depression that private ownership of gold was prohibited. Not totally sure about that. This is an area I need to look into farther.

sabrina 1

[sabrina 1]

44. I don't know whether paper money is best. I know a few people who

have been buying gold. So it is not prohibited now. I can't figure out though what the benefit is in owning gold even if everything crashed as it did during the Depression. You can't eat gold!

[rhett o rick]

46. Historically gold has always been accepted as a unit of value.

Where paper money may become worthless gold will always be valued. The problem is that it would be too valuable I believe. if you had an ounce and wanted a loaf of bread, I dont know what you would get for change.

This is another area I know very little about.

[starroute]

6. Are they going to let the banks fail or bail them out again?

That's the part I don't understand. Most of the OP seems to suggest that they're resigned to the too-big-to-fail banks going down and are making their plans accordingly. But it also says, "The article links to Zero Hedge's story on how Spain is also considering this kind of scheme to help bail out the banks if they fail again."

So which is it? Bail out the banks themselves or just bail out the wealthy shareholders?

[sabrina 1]

9. There are a few articles linked in the original article. Good question

though. What I got out of all of it is that the banks WILL fail again, and again. I could be wrong, but that seems to be part of the whole ponzi scheme. Each time they fail, they get bailed out. Remembering some of Matt Taibbi's articles on the Bailouts, it seems that they use them to fund other 'ventures' such as the 'Wall St Wives' eg.

Iow, and I am absolutely ignorant when it comes to finances, so I'm really just guessing and wondering like everyone else, what is going on, but these bailouts seem to be Giant Interest Free Loans, not available to the rest of us.

The question is how long can they keep doing this, robbing the people, destroying economies, costing jobs, losing people their homes, before it finally comes crashing down. I really can't believe it is still going on frankly and that NO ONE has been held accountable.

[bvar22]

8. OWS is "the only threat to their criminal activities,"

and OWS has NO power to do ANYTHING beyond opening a few eyes,
and motivating a handful of people to GET Off Their ASS.

Our Political Elites certainly aren't going to do anything,
except make things WORSE for the 99% while protecting the quarterly profits of their 1% Investment Portfolios:

In a shameful display of "bi-partisanship" seldom witnessed in Washington, it took them less than a week to hand over a $TRILLON DOLLARS to Wall Street Executives,
No Questions Asked,
No strings attached.

And President Obama's selection to run the Department of Justice?
When it comes to Bankers or War Criminals:
[font size=3]See No Evil
Hear No Evil
Speak No Evil[/font]



You will know them by their WORKS,
not by their rhetoric, promises, or excuses.
[font size=5 color=green]Solidarity99![/font][font size=2 color=green]
--------------------------------------------------------------------------------------------------------------------------------[/center]

[sabrina 1]

14. I will never forget that. Henry walked into Congress like King, handed

them a three page demand, then threatened anyone we are told, who voted against it, with 'martial law'. And there was no one to do anything about it. No Government of the People to try to stop them.

Airc, the Republicans let the Democrats do it that time. They did it when Bush was president.

Knowledge is power though. And until OWS came on the scene there was nowhere to acquire the necessary knowledge to understand the extent of the Crimes they are committing. Certainly not the media.

The more people who wake up, the better chance there is of at least throwing some roadblocks in their way.

The federally, coordinated militarized campaign to try to shut down OWS is a testament to how afraid they are of the people acquiring that knowledge.

[bvar22]

22. That scene, with Paulson, in front of the TV cameras,

...patting each other on the back for their heroism in "fighting the Special Interests" and bi-partisanship in "Saving the Economy",
is forever burned into my memory.

"Saved the Economy"?
...highly debatable.
They definitely saved the jobs of a few Wall Street Bankers,
but, most importantly, they "saved" those invested in the Wall Street Banks
(ALL of Congress, and ALL of the 1%)
from having to deal with a decrease in the Quarterly Profits of their investment portfolios.

[KansDem]

52. "Martial law"

I had forgotten about that! Thanks for reminding me!

[sabrina 1]

53. Remember, Congress voted against the bailout initially after they received so much pressure

from both Repubs and Dems not to do so. That is when the threats began and they went back and voted again. This time the banks won despite the obvious will of the people. It was a devastating blow and later we were told about the threats of Martial Law and when asked 'who made the threats' the answer was 'Henry Paulson himself'. I also read that for a brief time Paulson was the 'de facto' leader of this country.

[KansDem]

55. Yes!

I remember now how Michael Moore covered this series of events in "Capitalism: A Love Story."

[customerserviceguy]

16. While I share your disdain for big banks

It isn't the banks that are doing this, it is the governments who may be contemplating taking part of depositors' funds. They won't exempt the small banks or the credit unions (or equivalent organizations) when they do this.

I have to think that the Cypress case is unusual, in that a lot of Russian oligarchy money is laundered through them. That probably isn't the case in any other place outside of Switzerland, and they're not part of the euro. It's like the cities that enact taxes on things that mostly tourists use, such as hotel/motel rooms and rental cars, it's a way of getting tax money without directly hurting your voting constituency.

If I'm wrong, then all hell breaks loose, as the lucky few who manage to get their savings out survive while everybody else perishes.

[starroute]

30. They're also doing their best to criminalize any opposition to corporations

Saying, "it isn't the banks, it's the governments" may be a difference without a difference, because the power of the state is increasingly turning into corporate power. Just count the ways:

- Turning copyright violations into felonies rather than matters of civil lawsuits.

- Criminalizing getting video evidence of factory farms.

- Use of eminent domain for private interests as long as there's some tenuous argument that it's in the public interest.

- Allowing corporations to pocket their employees' payroll tax deductions as an "incentive."

- TPP provisions that would compel governments to enforce the profit-seeking of corporations.

Am I leaving anything major out? Even if I am, it's becoming pretty clear that the agenda is to reduce government to (1) collecting taxes to be turned over to private interests and privatized providers of what used to be government functions and (2) using the power of the law to enforce corporate profits.

That is what the "anti-government" agenda really amounts to. So saying "it isn't the banks" becomes meaningless.

[KansDem]

54. Attempts to criminalize the videotaping of violent police tactics...

Last edited Mon Mar 25, 2013, 12:55 PM - Edit history (1)

...in order to suppress discontent and protect the 1%-ers.

Police forces have become more paramilitary as fear of the masses has increased.

edited for spelling...

[sabrina 1]

45. True, but we know that Wall St owns politicians. So it seems to me they

are doing what their benefactors paid them to do. Iow, they mostly work for Wall St. now, not just here but in Europe and elsewhere.

What is striking is the similarity in how things are run here and in Europe, in Australia and NZ and elsewhere. As if there was one government. Some people believe there is now, it is called Wall St. That is why when one country's economy crashes now, they all crash. And look at the 'austerity' policies being inflicted on all these countries, and they are working on the same thing here.

It cannot be a coincidence that these policies around the world, are the same. The PEOPLE don't like them but Governments no longer listen to the people. Look at what happened in France, under Sarkozy. There was enormous opposition to 'his' policies, huge protests, nationwide strikes etc, yet he simply ignored the people.

[Sadiedog]

17. I admit to knowing very little about finance but

it seems obvious that this is outright theft! It is disturbing that it is legal.

[sabrina 1]

38. It is outright theft. What else can it be called? I don't know much about finance

either but I do know when I am being robbed.

[WillyT]

18. HUGE K & R !!! - Thank You !!!

[Demeter]

19. Plunderball: catchy name!

[abelenkpe]

29. Why don't governments all over the globe

nationalize the banks instead of giving up their sovereignty and selling out their people to the demands of big banks? Who rules the world, multinational banks or democratically elected governments?

I keep expecting someone to finally stand up to the banks and say no, but it never happens.

Average people cannot get a return on their savings, or on CDs. The stock market is risky and so many have been burned from the tech crash and then the crash of 2008 that few trust their money there. Yet there is no way anyone can retire unless they gamble on the stock market with their savings and win.

Why do we have to gamble and win in order to retire after giving our best years to our jobs? Why is it impossible to save outside the stock market (casino) and retire after a lifetime of work? Why do we expect carpenters and teachers and construction workers to have inside knowledge or know someone who can help them with their investments so they can have a chance to retire? Am I the only one who thinks that is completely f'd up?

[sabrina 1]

48. No, you're not the only one asking all those questions.

They are all excellent questions and imo, the answer is that the people are no longer represented by their governments. IF they were, as soon as the extent of the corruption was discovered, the banks would have been nationalized, broken up, and the perpetrators thrown in jail.

Also when the people went onto the streets to protest Wall St's corruption, governments would have supported and protected them. Instead, there was a world wide, coordinated effort to drive them away and to shut them up.

[AikidoSoul]

33. Excellent post...but scary as hell.

I'm beyond pissed.

We are nothing but helpless victims to these criminals unless we can organize, mobilize, and change the system.

I've read that both the equipment and tactics used by law enforcement officials against Occupy folks, were war tactics and equipment. These folks are getting ready for more civil unrest, but there's nothing "civil" about their responses to it.

ACLU is doing research on how many law enforcement agencies are packing and loading the same type of equipment as is used in wars overseas.

[sabrina 1]

39. I think, if it had done nothing else, OWS demonstrated how far

Wall St. will go to protect its decades long achievements in buying Governments and all their institutions. You could not watch the coverage, mostly by citizen journalists, of what was clearly a coordinated, GLOBAL crackdown on that movement. I think we learned from that that the power they have accumulated is far, far greater than anyone realized.

Re your last sentence, the militarization of our civilian PDs is totally anti-Constitutional, yet nothing has been done about.

[jwirr]

34. I found out that money is seldom safe when it comes to banks. Social Security money is not supposed

to be safe from garnishing until I got into trouble. The money may have to be returned later but it can be taken from you.

[sabrina 1]

37. Are we at a point then, where the only way to keep your money safe is

bury it in the backyard? Virtually no % with the banks, and investing in the market is like going to Vegas, most people lose. Seems to me, considering everything we are finding out, that we are almost at the point people were at during the Depression.

An elderly relative who always keeps cash in her house, (she was a Depression baby) doesn't seem so paranoid anymore.

[jwirr]

49. I put mine in GoDirect which is still in a bank but it is a FED bank that holds our social security

money. I still do not know if it is safe. It is also not a real bank account. I cannot pay bills through it unless I pay through the billing site and I cannot deposit other money into the account. But at least I can go to the ATM and remove it if I want.

[Sadiedog]

40. Well for me its like what money?

But I bank with a credit union and they do seem better than the banks I have dealt with but again I do not have great savings or anything even close to a nest egg.

[sabrina 1]

41. Lol, same here, but I'm thinking of people who want to save and have

only a few thousand after working for years. As of now, if the banks failed, their small savings would be protected by the FDIC as they don't have enough to worry about going over the limit of protected money.

But what was proposed in Cyprus and now we know, in NZ and Spain and Italy and maybe here, was that some of that money can be taken to bail out the banks. I think around 10%. To a working class person that is like someone stealing their wallet.

[Sadiedog]

42. I know it is just disgusting .

[loudsue]

50. OWS needs to get more power.

Someone has to stop this insanity, and OWS has all the right ideas.

[woodsprite]

51. Banks would put a stop to it pretty quick once they noticed a pattern of withdrawal

Where my hubby and I work (higher ed), we can't get an actual paycheck. Everything is automatic deposit, even if you're a student worker.