New Rules for Banks Can Hurt You

Our ruling class has settled on new rules for banks to protect them at your expense.


Did you know during the Great Depression that a dollar in your hand was valued at forty percent higher—and sometimes much more—than a dollar in your bank account? Why is that? Because there was significant risk you could not get that dollar out of the bank when you wanted it—and maybe not at all.

Virtually no one perceives it, but those days are returning to the financial world. Being clear: This impacts you, if you have any savings or checking accounts, or even investment accounts with a major bank.

From the Web of Debt blog:

On the weekend of November 16th, the G20 leaders whisked into Brisbane, posed for their photo ops, approved some proposals, made a show of roundly disapproving of Russian President Vladimir Putin, and whisked out again. It was all so fast, they may not have known what they were endorsing when they rubber-stamped the Financial Stability Board’s “Adequacy of Loss-Absorbing Capacity of Global Systemically Important Banks in Resolution,” which completely changes the rules of banking.

Russell Napier, writing in ZeroHedge, called it “the day money died.” In any case, it may have been the day deposits died as money. Unlike coins and paper bills, which cannot be written down or given a “haircut,” says Napier, deposits are now “just part of commercial banks’ capital structure.” That means they can be “bailed in” or confiscated to save the megabanks from derivative bets gone wrong.

The G20 Meeting in Australia in November further solidified politician-approved changes in the financial world that leave everyone with a balance in the bank at-risk of having money confiscated should one of your bank’s bets in the investment markets go bad.

As one writer explains, “…banks take out a derivatives bet, the bank on the other side of that bet (the ‘counterparty’) requires some collateral to be put up. Thanks to deregulation of the financial system over the past couple of decades, banks have — unbeknown to the public — been putting up their customers’ deposits as collateral for their derivatives bets.

“Now, because collateral (or ‘security’) has been put up for those derivatives bets (or ‘positions’), this means that those bets are considered ‘secured’. And in a bank ‘resolution’ (ie, a ‘bail-in’), the secured creditor has seniority (ie, priority) over ‘unsecured’ creditors (ie, depositors).”

[See this post for an Australian explanation of what is now a legal and financial fact across the Western system.]

I cannot tell you what to do in your individual case, but this is one more attempt to make sure you’re at least aware of these massive changes. Only the people of Cyprus have endured this so far (losing 60-80 percent, or more, of their deposits, in some cases) but since their losses, Western elites have moved to codify these rules in every major country.

Why have they been in such a rush to put these changes in place? Because they see the risks, and believe they will be needed. The question is simply where and when, not if.

You have been warned. Again.