Bank deposits? Consider them a loan to the bank!
derryb
Posts: 36,585 ✭✭✭✭✭
Public Banking Institute Calls Largest Wall Street Banks “Unsafe,” and Backs It Up
"The Cyprus situation brought with it the stark realization that depositors are creditors of a bank and face risk along with other creditors."
It has long been said that a bank account depost is really just a loan to the bank - Cyprus situation proved this to be true.
"The Cyprus situation brought with it the stark realization that depositors are creditors of a bank and face risk along with other creditors."
It has long been said that a bank account depost is really just a loan to the bank - Cyprus situation proved this to be true.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
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Comments
And yes, companies (including banks) have been known to default on their debts from time to time.
47% receive government subsidies from a bankrupt government.
A large percentage of the remaining folks who actually do work - live paycheck to paycheck. If some of this group's money is confiscated through a bail-in rescue of big banking, how many new mortgage defaults do you think there will be?
Tell me again - why are these banks and their managements exempt from consequences when they screw up with other people's money?
Assuming a new round of mortgage defaults from a big bank bail-in, will we just see more and more of what we've seen since 2008? Or will the system even be able to function with another population segment of its cash cow no longer able to keep up with payments?
What if you accrue money in a bank account for quarterly tax payments and a chunk of it gets confiscated for a bank bail-in? Isn't that a prima facie case of grand larceny? What happens then to your tax problem? Do you get to lose your mortgage?
If you believe that only the accounts having the largest balances will be subject to a "bail-in", just remember that those are the very same folks who are being protected so that a bail-in is required in the first place.
To further complicate things, you become a suspect of various crimes for even saving money in the form of cash, outside the banking system - or for possessing a relatively larger amount of cash.
It's selective targeting, and what's bullseye doing on your back? It's your money. Be careful with it.
I knew it would happen.
Knowledge is the enemy of fear
<< <i>FDIC >>
You mean the one that has tens of billions in assets to cover trillions of bank deposits? What could possibly go wrong???
go back to sleep citizen your government will protect you. Stop questioning our authority.
<< <i>
<< <i>FDIC >>
You mean the one that has tens of billions in assets to cover trillions of bank deposits? What could possibly go wrong???
go back to sleep citizen your government will protect you. Stop questioning our authority. >>
I can't imagine a scenario where the Feds would allow the FDIC to default. Don't forget they have the power to create money out of thin air.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
priority when the bank is under stress or going under. I guess we can all stand in line and wait for the FDIC to eventually pay off the saving and checking account holders. How
long did it take (or is it taking) for the govt to pay out disaster relief monies to victims of hurricane Sandy?
<< <i>I can't imagine a scenario where the Feds would allow the FDIC to default. Don't forget they have the power to create money out of thin air. >>
Creating money to assist FDIC with a massive bank failure is nothing short of a bank bailout at taxpayer expense and will not be tolerated a second time.
Per a 2012 joint paper from the FDIC and the Bank of England:
"The goal is to produce resolution strategies that could be implemented for the failure of one or more of the largest financial institutions with extensive activities in our respective jurisdictions. These resolution strategies should maintain systemically important operations and contain threats to financial stability. They should also assign losses to shareholders and unsecured creditors in the group, thereby avoiding the need for a bailout by taxpayers."
<< <i>FDIC >>
FDIC is a heavily underfunded public relations program to make you think your money is safe in a US bank. It is nothing more than another paper promise that in a time of chaos will be worth nothing. Those with faith in FDIC are setting themselves up to be sheered.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
<< <i>
<< <i>I can't imagine a scenario where the Feds would allow the FDIC to default. Don't forget they have the power to create money out of thin air. >>
Creating money to assist FDIC with a massive bank failure is nothing short of a bank bailout at taxpayer expense and will not be tolerated a second time.
Per a 2012 joint paper from the FDIC and the Bank of England:
"The goal is to produce resolution strategies that could be implemented for the failure of one or more of the largest financial institutions with extensive activities in our respective jurisdictions. These resolution strategies should maintain systemically important operations and contain threats to financial stability. They should also assign losses to shareholders and unsecured creditors in the group, thereby avoiding the need for a bailout by taxpayers."
<< <i>FDIC >>
FDIC is a heavily underfunded public relations program to make you think your money is safe in a US bank. It is nothing more than another paper promise that in a time of chaos will be worth nothing. Those with faith in FDIC are setting themselves up to be sheered.
it almost looks like the american public
<< <i> it almost looks like the american public
The American public is a bit... heavier?
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
<< <i>Sinclair has been recommending to "get out of the system". Let's follow the sequence here.
47% receive government subsidies from a bankrupt government.
A large percentage of the remaining folks who actually do work - live paycheck to paycheck. If some of this group's money is confiscated through a bail-in rescue of big banking, how many new mortgage defaults do you think there will be?
Tell me again - why are these banks and their managements exempt from consequences when they screw up with other people's money?
Assuming a new round of mortgage defaults from a big bank bail-in, will we just see more and more of what we've seen since 2008? Or will the system even be able to function with another population segment of its cash cow no longer able to keep up with payments?
What if you accrue money in a bank account for quarterly tax payments and a chunk of it gets confiscated for a bank bail-in? Isn't that a prima facie case of grand larceny? What happens then to your tax problem? Do you get to lose your mortgage?
It's a rigged system. There was a great piece in the Atlantic of an exchange between Liz Warren and various Fed bank officials during investigations of banks making illegal deals with drug front banks. To paraphrase she said that if you sold an ounce of cocaine, you would probably go to jail, and if you did it a number of times you would certainly go to jail for a long time. The heads of HSBC however , who had been warned for YEARS not to deal with the people they were ( cartel fronts, crooked South American banks) were finally called on the carpet. I can't remember for sure , I think it was 70 billion they had made on these deals, no one went to jail, or was even prosecuted, they paid a small fine, and as Warren said " went back to their houses in the Hamptons."
They have the power, the lobbyists and the corporations run Washington, the politicians are there only as shills.
If you believe that only the accounts having the largest balances will be subject to a "bail-in", just remember that those are the very same folks who are being protected so that a bail-in is required in the first place.
To further complicate things, you become a suspect of various crimes for even saving money in the form of cash, outside the banking system - or for possessing a relatively larger amount of cash.
I've been a customer, buyer and seller, of ebay and PP since 1999. Last week I was told that "certain aspects" of my account would not be accessible until they had some more proof of who I am. They have my bank account numbers and SS numbers, along with anything you get in a credit report. I (we) pay the price for the transgressions of the wealthy.
It's selective targeting, and what's bullseye doing on your back? It's your money. Be careful with it. >>
SS must be DD? well still....
I think a run on the banks would be a real SHTF moment.
Everybody walking around with cash..oops there isn't enough USD$ to go around. NOW the printing presses will mean something TANGIBLE.
One account I read indicated that only around $400-$600 BILL in cash circulates in the USA. The rest of it is overseas. The claimed US gold reserves only add up to around $370 BILL.
Both items are scarce.
Silver is safer?
Knowledge is the enemy of fear
<< <i>Please name one individual to whom the FDIC has not made whole when required to do so.
Silver is safer? >>
Metals are in my hands, whose hands are your bank deposits in? You don't even know who they loaned your money to.
FDIC is not prepared to cover a large bank failure - do the math. FDIC exists to convince you your money is safe. Good to know someone is buying into it - at least the program is not a complete waste of tax dollars.
When one of the big boys goes down the names you seek will be a mile long and will apparently include yours. You keep your underfunded FDIC insurance for a big bank failure and I'll keep my metal insurance. You're happy, I'm happy, everybody happy.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Knowledge is the enemy of fear
<< <i>Just a guess, but I think more money has been lost in silver than bank deposits over the last years. >>
That is true up to now, but no one can be sure if it will be true in the future.
However, this is another possible scenario I'm not loosing any sleep over it.
Losing my bank deposits because BofA or Wells Fargo fail and the FDIC defaults ranks 937th (for comparison, getting hit by lightning is 936th)
Higher up at 259th is having my physical PMs stolen from me by force or stealth, while having my PMs decline in market value is ranked far higher, at 16th
Liberty: Parent of Science & Industry
<< <i>Just a guess, but I think more money has been lost in silver than bank deposits over the last years. >>
Not if we include all the banks in the world. And in any event silver is essentially a zero sum game. When someone lost money....another entity made money.
I'm more concerned with what happens in the post-Cypriot banking world of bail-ins....not what has come before. There's a new sherriff in town. And they don't like taking prisoners.
I'd say I'd rank seeing my brokerage, IRA, or banking accounts "bailed-in" or "converted" to "safe" TBonds to be in the top 3 of my financial concerns.
As much as I hate the US banking system I still use it when convenient
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
(1) Largest banks declared unsafe by Public Banking Institute.
(2) Account holders of those banks are considered creditors and as such will share in losses.
Failure of a largest bank will result in massive losses.
Those that see no possible failure of a large bank or believe FDIC limited funds will be enough, consider your bank deposits completely safe. Those that see such a failure possible consider your deposits at risk.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
<< <i>Those that see such a failure possible consider your deposits at risk. >>
And do what?...Buy more PM's? Or stash your cash under a mattress. If the FDIC fails or T Bills or T Notes become worthless ... it's "Road Runner" time.
<< <i>
<< <i>Those that see such a failure possible consider your deposits at risk. >>
And do what?...Buy more PM's? Or stash your cash under a mattress. If the FDIC fails or T Bills or T Notes become worthless ... it's "Road Runner" time. >>
risk management, but it only works for those that recognize risk
Recognizing the risk was the point of the OP. Accepting and/or minimizing the risk is in your hands.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
<< <i>
<< <i> it almost looks like the american public
The American public is a bit... heavier?
ayup
<< <i>back to the OP:
(1) Largest banks declared unsafe by Public Banking Institute.
(2) Account holders of those banks are considered creditors and as such will share in losses.
Failure of a largest bank will result in massive losses.
Those that see no possible failure of a large bank or believe FDIC limited funds will be enough, consider your bank deposits completely safe. Those that see such a failure possible consider your deposits at risk. >>
Didnt we have some big banks fail in 2008?
Public Banking Institute Maybe i'll stop by and ask a few questions. LOL
PBI is related to http://www.inquiringsystems.org/
derryb, where do you find these groups?
Knowledge is the enemy of fear
<< <i>derryb, where do you find these groups? >>
Places where only open eyes and open minds dare tread.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
I agree with Baley....of all the things to worry about this is pretty far down the list.
I keep less than $100,000 in any account. If something happens, it happens, but then again, if something happens that big, it will affect a lot more people than just myself.
If things like this keep you awake at night, you may want to go buy your own private island and just hold onto your assets in a physical sense.
One can never truly protect anything and everything. Best you can do is minimize risk and control your paranoia
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
If you're really interested, you can click on the "Public Banking" tab in the link you provided, or you can watch the 12 minute video on Sinclair's website that is showcased today.
I knew it would happen.
<< <i>
<< <i>Those that see such a failure possible consider your deposits at risk. >>
And do what?...Buy more PM's? Or stash your cash under a mattress. If the FDIC fails or T Bills or T Notes become worthless ... it's "Road Runner" time. >>
Do what? How about having your deposits or accounts in a bank other than BoA for example? Nothing wrong with keeping a couple months of expenses in cash close by (and not in
the bank). Under the mattress is too easy. I'm sure you'll figure it out. There will be a banking holiday in our future. The only question is whether it lasts days or weeks.
Being stocked up on barterable items and basic living supplies is not a bad idea either. Nope, doesn't all have to be in PMs. Your goal is to be able to weather a couple weeks or even
months of major banking, energy, and financial disruptions. If you live in Baleyville you have it made as those communities all work together and are fairly self sufficient. If you're in
a major city you've got even bigger logisitc problems.
Yes, we had some big banks fail in 2008. And the solution was to allow bigger banks to absorb those guys and all their bogus derivatives, mortagages, and what have you (with the
exception of Lehman which allowed the derivative's time bomb fuse to be officially lit). The FED and Treasury also coordinated a $10-$20 TRILL pay out to hundreds of banks,
corporations, and financial entitities around the world. Don't count on Santa Claus Benny making a return trip in his sleigh/helicopter on the next major banking crisis.
<< <i>Public Banking Institute Maybe i'll stop by and ask a few questions. LOL
If you're really interested, you can click on the "Public Banking" tab in the link you provided, or you can watch the 12 minute video on Sinclair's website that is showcased today. >>
Actually, I might rather enjoy a conversation with a bunch of Napa Valley quacks. After a few bottles of wine that is. LOL
Knowledge is the enemy of fear
<< <i>
<< <i>Public Banking Institute Maybe i'll stop by and ask a few questions. LOL
If you're really interested, you can click on the "Public Banking" tab in the link you provided, or you can watch the 12 minute video on Sinclair's website that is showcased today. >>
Actually, I might rather enjoy a conversation with a bunch of Napa Valley quacks. After a few bottles of wine that is. LOL >>
6-8 glasses of duckhorn?...mmm...
You didn't bother with the 12 minute video, did you? I don't believe I heard any references to the quacks in the video.
I knew it would happen.
<< <i>Do what? How about having your deposits or accounts in a bank other than BoA for example? >>
Why bother. According to the paranoid doomsayers, all banks are going to fail and imminent financial Armageddon will be upon us. Sounds familiar? It should, similar "song & dance acts" have been forecast for the last 20 or more years.
<< <i>
<< <i>Do what? How about having your deposits or accounts in a bank other than BoA for example? >>
Why bother. According to the paranoid doomsayers, all banks are going to fail and imminent financial Armageddon will be upon us. Sounds familiar? It should, similar "song & dance acts" have been forecast for the last 20 or more years. >>
So, it's all are none?
Is there any doubt that the FED (at the expense of taxpayers and savers) are keeping most of them alive? Now that the FED itself has assumed unmanagable debt (Treasuries) do you think they can pump indefinitetly? They can print indefinitely but at some point they are printing worthless paper.
Local, member owned credit unions are probably much safer to store dollars.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
There you go. Been with a credit union for about 15 years. Want a loan for a car or a few thousand to fix those pesky patio doors, right now? Your credit union will be happy to see you with a smile and a minimum of hassle instead of some big bank 20 something juice boxer wanting to know your wife's maiden name and three next of kin. And...the CUs have credit cards, CD's (at member rates), and all the conveniences or personal finance. By far, the best thing is that they are glad to see their members and are happy you are with them...kind of like the old days. Don't forget free checking and no minimum balance (you do have to keep $5 on deposit as a condition of membership though). What mine doesn't have are SDB's.
It is hard to understand why the big banks even bother with the personal banking business...the sheep in the dark photo comes to mind here, before the fleecing or even more astounding; why do the people line up at the BB's for their monthly hosing, served with an appropriate sneer and a little service charge for wanting to talk to them about YOUR MONEY. Besides, if you need a high dollar credit account get an AMEX card...it's all good.
What to do with all your cash when you are full of PM's and have too much money...what, you can't buy some land for a little tax love, maybe get a few nice rentals to take the head off of that cash stash and get some regular flow. What...you can't get into some rare numismatics or quality art? Can't fund some start-ups or buy an airplane and learn to fly? There are millions of opportunities for those with too much cash to have plenty of fun and if the big banks go under, you can sit back and enjoy reading about it instead of nursing a hickie. There is still no reason to not have a couple or three months of cash American money in your midnight gardening account.
<< <i>Local, member owned credit unions are probably much safer to store dollars >>
Credit Unions have the same max. insurance coverage as Banks, except the Federal Agency that covers C.U. is NCUA. You can bet your sweet bippy, if FDIC ever becomes "worthless" so will NCUA. FYI, over 10,000 Credit Unions have either merged or gone out of existence over the last 10-15years. The original charters mandated that, in order to join, you had to be in their field of membership. Well, that requirement went out the window about 10 years ago and most CU's operate now like a savings & loan with very limited restrictions to join. And if you believe that C.U.'s are geared for not to profit operations, think again. NCUA will shut them down or merge them in a heart beat if they continue to operate at a loss. In a SHTF scenario, CU's will be no safer than banks. BTW, my checking account is with a CU and I'm very pleased with their service and would rather, if doomsday befalls us, loose my money with them.
<< <i>
<< <i>Local, member owned credit unions are probably much safer to store dollars >>
Credit Unions have the same max. insurance coverage as Banks, except the Federal Agency that covers C.U. is NCUA. You can bet your sweet bippy, if FDIC ever becomes "worthless" so will NCUA. FYI, over 10,000 Credit Unions have either merged or gone out of existence over the last 10-15years. The original charters mandated that, in order to join, you had to be in their field of membership. Well, that requirement went out the window about 10 years ago and most CU's operate now like a savings & loan with very limited restrictions to join. And if you believe that C.U.'s are geared for not to profit operations, think again. NCUA will shut them down or merge them in a heart beat if they continue to operate at a loss. In a SHTF scenario, CU's will be no safer than banks. BTW, my checking account is with a CU and I'm very pleased with their service and would rather, if doomsday befalls us, loose my money with them. >>
You missed the whole point - CUs don't have the exposure to failure as do the big boys playing the derivatives and High Frequency Trading game. CUs are generally not casinos, they choose to invest carefully in their members via loans, the same as big banks did before they got greedy.
It's not about what kind of account insurance coverage, it's about needing that coverage.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
For example, I personally have never, not once, lost a dollar deposited in a bank to bank failure. (loss of purchasing power to inflation is a different question and the point pre-conceded)
On the other hand, I have many Many MANY times lost dollars that were invested in precious metals, including yesterday and today.
Liberty: Parent of Science & Industry
<< <i>
<< <i>
<< <i>Local, member owned credit unions are probably much safer to store dollars >>
Credit Unions have the same max. insurance coverage as Banks, except the Federal Agency that covers C.U. is NCUA. You can bet your sweet bippy, if FDIC ever becomes "worthless" so will NCUA. FYI, over 10,000 Credit Unions have either merged or gone out of existence over the last 10-15years. The original charters mandated that, in order to join, you had to be in their field of membership. Well, that requirement went out the window about 10 years ago and most CU's operate now like a savings & loan with very limited restrictions to join. And if you believe that C.U.'s are geared for not to profit operations, think again. NCUA will shut them down or merge them in a heart beat if they continue to operate at a loss. In a SHTF scenario, CU's will be no safer than banks. BTW, my checking account is with a CU and I'm very pleased with their service and would rather, if doomsday befalls us, loose my money with them. >>
You missed the whole point - CUs don't have the exposure to failure as do the big boys playing the derivatives and High Frequency Trading game. CUs are generally not casinos, they choose to invest carefully in their members via loans.
It's not about what kind of account insurance coverage, it's about needing that coverage.
I fully agree that your friendly neighborhood CU is safer than the TO BIG TO FAIL BANKS. The title of your thread: "Bank deposits? Consider them a loan to the bank" does not hold water in my opinion. It's like a headline from a scandal sheet magazine that would not apply to most banks but only to a handful as outlined in the PBI article.
<< <i>I fully agree that your friendly neighborhood CU is safer than the TO BIG TO FAIL BANKS. The title of your thread: "Bank deposits? Consider them a loan to the bank" does not hold water in my opinion. It's like a headline from a scandal sheet magazine that would not apply to most banks but only to a handful as outlined in the PBI article. >>
Bank account holders are considered creditors to a bank, regardless of the size of the bank. Size of the bank only determines the risk at play.
<< <i>Some folks do risk assessments based in part on probability of occurrence, combined with severity of the problem if the risk occurs. For example, I personally have never, not once, lost a dollar deposited in a bank to bank failure. (loss of purchasing power to inflation is a different question and the point pre-conceded) On the other hand, I have many Many MANY times lost dollars that were invested in precious metals, including yesterday and today." >>
Proper risk assessment weighs more than the odds of something going wrong. When done properly it applys weight based also on loss/cost to recover. What this means is that a risk with 75% probablilty of occurrence and recovery cost of $10 should not get the attention (and planning) of a slight risk with a probability of 10% occurence but a loss/recovery cost of $1 million.
If your example of a bank account involved one's life savings, a prudent saver would take notice and take protective measures regardless of odds of occurrence.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
What would be the point of having a savings account anyway? To get that sweet .15% interest rate ?
I have multiple checking accounts for paying bills and cashing my paycheck etc. those are very useful for day to day life. Why on earth would anyone need $100,000 in a savings account? Now if you live in Cyprus and can get 6% sure go ahead .
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
<< <i>
<< <i>I fully agree that your friendly neighborhood CU is safer than the TO BIG TO FAIL BANKS. The title of your thread: "Bank deposits? Consider them a loan to the bank" does not hold water in my opinion. It's like a headline from a scandal sheet magazine that would not apply to most banks but only to a handful as outlined in the PBI article. >>
Bank account holders are considered creditors to a bank, regardless of the size of the bank. Size of the bank only determines the risk at play.
<< <i>Some folks do risk assessments based in part on probability of occurrence, combined with severity of the problem if the risk occurs. For example, I personally have never, not once, lost a dollar deposited in a bank to bank failure. (loss of purchasing power to inflation is a different question and the point pre-conceded) On the other hand, I have many Many MANY times lost dollars that were invested in precious metals, including yesterday and today." >>
Proper risk assessment weighs more than the odds of something going wrong. When done properly it applys weight based also on loss/cost to recover. What this means is that a risk with 75% probablilty of occurrence and recovery cost of $10 should not get the attention (and planning) of a slight risk with a probability of 10% occurence but a loss/recovery cost of $1 million.
If your example of a bank account involved one's life savings, a prudent saver would take notice and take protective measures regardless of odds of occurrence. >>
Couldn't agree more
Personally, I'd never even consider investing 100% of my life savings in any one thing, particularly anything as boring as a savings account or as risky as a pile of shiny rocks. Rather, I'll spread it among several asset classes (including small allocations to the boring and the risky) and distribute most of the funds in shares of a number of solid businesses with strong earnings and the potential for continued growth.
Liberty: Parent of Science & Industry
There's nothing really wrong with asset allocation. Chances are that you'll be okay in the long run, based on past history and relatively normal markets. And it's also true that the trend is your friend. And it's never different this time.
My own approach is somewhat different, and it's based mainly on my opinion that there's a real possibility that things are really screwed up this time. I don't know whether it's because I'm getting a bit older or because I look at things more negatively than when I was younger, I truly don't know the reason. The fact remains that we are in uncharted territory in more ways than I can ever recall - financially, strategically, politically and economically. This causes me more than nominal concern.
I knew it would happen.
<< <i>The fact remains that we are in uncharted territory in more ways than I can ever recall - financially, strategically, politically and economically. This causes me more than nominal concern. >>
Unchartered only to the US. World history is full of examples of what happens when a nation destroys the value of its currency, over extends its military might and sells its politicians to the highest bidder. Your concerns are fully warranted and those that share them and take the necessary precautions will be financially protected.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Boy do I feel better now.... hey, what about my checking balance??
Same same, .....or not.
Does it really matter?
She also said it is possible for banks to function properly without restoration of Glass-Steagall by ensuring "firewalls of integrity."
Once a Wall Street mouthpiece, always a Wall Street mouthpiece.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
The banks themselves are much safer now. We went through the financial
crisis and everything was fine for depositors.
No depositor lost a penny in an insured account.