Get Out Of Big Banks Now!

The next big bank failure will not be resolved with a government Bail-Out. It will be resolved by a depositor Bail-In. It’s now legal for a big bank to confiscate your money.

Introduction

A few months ago I discovered that US banks are not legally required to give you cash whenever you request a withdrawal. It turns out that as soon as you deposit money in a bank, the funds become the bank’s property and you become an unsecured creditor holding an IOU from the financial institution. In trying to verify this I began researching the US financial system. As I dug deeper I uncovered a complex series of federal laws, risky big bank financial maneuvers, international financial group agreements, secret G20 leader approvals, and a mysterious, relatively unknown organization which happens to be most powerful financial entity in the world. These convoluted pieces of information came together when I unearthed a document co-authored by the US Federal Deposit Insurance Corporation (FDIC) and the Bank of England outlining how the next big bank failure would be handled.

As of December 2012, federal laws, government agency approvals, international agreements, and tactical procedures are in place so the next big bank failure will trigger an entirely new resolution policy. No longer will  there be a government-taxpayer funded Bail-Out, but rather a Bail-In. The big banks will be allowed toconfiscate your deposits at their discretion with no prior notice. Your compensation for the bank’s absconding with your money is a new issuance of stock (equity) in their bank.

In other words, you may walk into your bank one day and instead of getting cash for a withdrawal request, you will receive a stock certificate and it will be your responsibility to convert it to cash. This legal seizure of your money will most likely happen in just one night in a process called “overnight sweeps.”

Bottom line – you immediately need to move all your funds from big banks to other institutions or investments. Assets in J.P. Morgan Chase and Bank of America are especially vulnerable. Sound unbelievable? Doubt this could actually happen? Think again – it already has. In March 2013, Cypress became the first nation to experience this new policy formally referred to as “Resolving Globally Active, Systemically Important,  Financial Institutions” (translation – procedure to save big banks in lieu of a government-taxpayer Bail-Out). The  confiscation of depositor funds (hence the name Bail-In) in Cypress was not only approved but mandated by the European Union, along with the European Central Bank and the International Monetary Fund. They told the Cypriots that deposits below €100,000 in two major bankrupt banks would be subject to a 6.75% levy or “haircut,” while those over €100,000 would be hit with a 9.99% “fine.” When the Cyprus national legislature overwhelming rejected the levy, the insured deposits under €100,000 were spared; but it was at the expense of the uninsured deposits, which took a much larger hit, estimated at about 60 percent of the deposited funds.

Think your money is safe if it’s insured by the Federal Deposit Insurance Corporation (FDIC)? It’s not. First of all, the FDIC can only protect your deposits if it has the money itself. With trillions of dollars in deposits and only $33 billion in the FDIC fund (as of 12/31/12), and the Dodd-Frank mandate of no more taxpayer bail-outs, there’s nowhere to get the money except from the depositors. The FDIC was set up to ensure the safety of deposits. Now, it seems, its function will be the confiscation of deposits to save Wall Street by executing the new big bank failure resolution strategy of Bail-In.

After I had compiled this information, and even though the result was staring me in the face, I still just couldn’t believe it. I’m not a financial maven so I reasoned I must have misinterpreted something. Consequently, I contacted a friend with extensive financial acumen and asked him to refute my research. His past experience includes serving as an advisor to two administrations on banking legislation and a former bank CEO. He now assists investor groups in applying for a federal bank charter or researches the purchase an existing institution for possible acquisition. Upon completing his
analysis he decided to transfer 80% of his bank deposits from Money Center Banks to smaller well-capitalized federal banking institutions and federal credit unions. That’s good enough for me. I cashed out and started researching alternatives to big banks.

This document contains;
1. A summary timeline describing the events and their ramifications leading to the Bail-In method becoming the US Government’s new official policy to resolve a big bank failure.
2. A one-page example (so far hypothetical), describing how you would be affected.
3. A step-by-step tutorial to find and rate a credit union or community bank to move your money.
4. Possible legislative and long term solutions, including references and links to additional information sources.
5. A detailed timeline describing the events and their ramifications proving that Bail-In is fact. This version substantiates the new bank failure resolution technique with comprehensive references and links throughout.

Infographics are also incorporated pictorially demonstrating the magnitude of US big bank’s derivatives risk exposure that could lead to the next bank failure thus triggering Bail-In. When I first understood that big banks had been sanctioned by the US Government to literally take our money, I immediately moved my capital from Chase to a credit union and a community bank. I also wanted to inform others of this potentially catastrophic personal financial hazard, but I wasn’t sure they would believe me. That’s the reason this document contains so much detail i.e., to prove that Bail-In and the possible confiscation of our money is real and undeniable. It is of course up to you to read and validate this material.

– See the full document here –