It’s now official. Banks can take your money if their gambling goes south to pay their debts. Yes, they gamble with leveraged derivatives. And if they lose, you lose. They get dibs on your money.
Mark Nestman of Nestman.com, a seasoned journalist and financial and geopolitical analyst, reported that “On November 16, [2015] leaders of the G20 Group of Nations — the 20 largest economies — made an important decision. The world’s megabanks now have official permission to pledge depositor accounts as collateral to make leveraged derivative bets. And if they lose a bet, the counterparty to the contract has first dibs on your money.
“Cyprus-style bail-ins” are on the horizon for bank customers around the world. And the governments of these 20 countries are likely going to put these arrangements into law. Most have already done so, including the USA.
But that wasn’t all the G20 did to your bank account. They created a way to convert your money into stock – into the bank’s stock. Called the “Adequacy of Loss-Absorbing Capacity of Global Systemically Important Banks in Resolution,” the plan allows the bank to convert your money into bank stock so that you will be playing the stock market just as if you did it through your broker. You would incur the same risks.
Here’s how it will work. When you put your money into a bank, particularly a bank that is “to big to fail,” if they bank gets into trouble and becomes insolvent, it will “promptly recapitalize” your money by converting it to stock.
“But this proposal profoundly changes the rules for banking globally,” wrote Nestman,**** “and not in a good way. This helps them avoid the politically unpopular tax-payer funded bail-outs of earlier financial crises. And the so-called “recapitalization” would include your checking accounts, CDs, and money market accounts. Nestman says banks will essentially be taking your money to a horse racing track and betting on a nag.
Essentially, your deposits become unsecured debt of the bank. The leveraged derivatives are secured. Therefore, when trouble arises, your unsecured debt, which has become collateral for the secured debt, ends up in the hands of the secured creditors, and taken from you. Heads, the bank wins. Tails, you lose.
The FDIC (which is the U.S. bank deposit insurance company) has only $1 to back up every $100 of all deposits. Under present conditions, with over $300 trillion in leveraged derivatives, the failure of one large Wall Street bank could deplete the FDIC’s fund.
Perhaps this is the time to invest in the bank of heaven, for the time is coming when all hoarded wealth will become worthless.
“Go to now, ye rich men, weep and howl for your miseries that shall come upon you. Your riches are corrupted, and your garments are motheaten. Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days.” James 5:1-3