Abstract: Thanks to deregulation of the financial system over the past couple of decades and the insolvency reforms in 2005, banks have — unbeknown to the public — been putting up their customers deposits as collateral for their derivatives bets.
And in a bank “resolution” (ie, a “bail-in”), the secured creditor has seniority (ie, priority) over “unsecured” creditors (ie, depositors).
The FSB bail-in scheme is really designed to ensure that the mega-banks will receive priority for payout on their derivatives positions, in any “resolution” of a failing bank. What we call “theft”, they call “ensuring financial system stability” (Barnaby Is Right). And that with G20 approval.
Rothschilds Wall Street bank, JP Morgan, triggered the current financial crisis through fraudulent derivatives speculations in 2008 – and has by legislature just initiated its 2nd phase in accordance with the EU’s Cyprus Savings confiscation model – by influencing the US Congress .
In 2013 something uncanny happened: As predicted, Cyprus was just the beginning of the NWO stealing our savings. The EU finance ministers just agreed on following the Cypriot model of securing bank accounts of up to 100.000 euros – and stealing what exceeds that amount in case of bank insovency. And this comes as no surprise: Euro Chief Jeroen Dijsselbloem said in April: “The solution agreed for Cyprus will be from now on the standard arrangement for any future financial bailout or rather bail-in in Eurozone.” The poor man was harrassed by hypocritical EU governments calling Cyprus an exceptional case. On 27 June the same leaders adopted the Cypriot model in general
In 2013, The Financial Stability Board (FSB) was entrusted by the G20 with the task of securing the Too Large to Fail (TLTF) Banks. The FSB has now forwarded an proposal without details – writes however “In early 2015, the FSB will undertake comprehensive impact assessment studies to inform the calibration of the Pillar 1 element of the TLAC (“total loss-absorbing capacity”) requirement for all Global System Important Banks (GSIB), with the participation of the Basel Committee for Bank Supervision under the also participating Bank for International Settlements (BIS) – Rothschild´s central bank of central banks – read here prof Carroll Quigle´s descriptipn of that bank´s purpose: A Bank system to govern the world with.
FSB 10 Nov. 2014: The Proposals were developed by the FSB in consultation with the Basel Committee on Banking Supervision (BCBS). The proposals respond to the call by G20 Leaders at the 2013 St. Petersburg Summit and will, once finalised, form a new minimum standard for “total loss-absorbing capacity” (TLAC).
The FSB is chaired by Mark Carney (right), Governor of the Bank of England. Its Secretariat is located in Basel, Switzerland, and hosted by the BIS – and Carney is a participant of Lady Lynn de Rothschild´s “Inclusive Capitalism” club. Carney spent 13 years with Rothschild´s Goldman Sachs.
The FSB brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts.
The new TLAC standard should provide home and host authorities with confidence that G-SIBs have sufficient capacity to absorb losses, both before and during resolution, and enable resolution authorities to implement a resolution strategy that minimises any impact on financial stability and ensures the continuity of critical economic functions.The TLAC proposals will be finalised by the time of the next G20 Leaders’ Summit in 2015.
JP Morgan´s fraudulent derivatives speculations started the current financial/economic crisis in 2008 – are now starting its 2. phase
Web of Debt 12 Dec. 2014: On December 11, 2014, the US House passed a bill repealing the Dodd-Frank requirement that risky derivatives be pushed into big-bank subsidiaries, leaving our deposits and pensions exposed to massive derivatives losses. The tide turned when Jamie Dimon, CEO of JPMorganChase, stepped into the ring. Perhaps what prompted his intervention was the unanticipated $40 drop in the price of oil. That drop could trigger a derivatives payout that could bankrupt the biggest banks.
Left: Jamie Dimon is the CEO of the notorious JP Morgan Bank – of which Rothschild owns 20%. JP Morgan was Rothschild´s agent (alongside with Nelson Aldrich (Grandfather of David Rockefeller) and Rothschild agent and Jesuit, Edward Mandell House by the founding of the Federal Reserve 1913. This Bank – Blythe Master – developed the notorious CDOs (mixed subprime mortgages cut in tranches and sold as safe securities – without any backing. This triggered the 2008 financial crisis. The bank accused by the SEC of the US government for fraudulent misleading of investors. A settlement was made: JP Morgan had to pay 13 bn dollars to the US Government (DWN 19.11.2013). JP Morgan admitted the misleading. Nothing for the hard hitten world. No criminal penalties followed!!! With the Help of US Treasurer and former Goldman Sachs CEO, J Morgan in 2008 had the Bear Stearns bank go bankrupt – then to engulf it with a 29bn dollars contribution from the Treasury and the FED – at a time when they had caused the share value to drop to 2 dollars! Also, JP Morgen took over the Lehman brothers through stealing a lot of money from that bank, so as to make it technically insolvent. Then Morgan took over!
Web of Debt 1 Dec. 2014 Ellen Brown: On the weekend of November 16th, all was so fast, the G20 leaders 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.
Deposits are now “just part of commercial banks’ capital structure.” Big banks are kept in business by expropriating the funds of their creditors. Rather than reining in the massive and risky derivatives casino, the new rules prioritize the payment of banks’ derivatives obligations to each other, ahead of everyone else.
Zero Hedge 19 March 2013: US Deposits in Perspective: $25 Billion In Insurance, $9,283 Billion In Deposits; $297,514 Billion in Derivatives. So not even our savings and insurances can cover the enormous derivatives casino game of the banksters with our values. Taxpayer money on a large scale may also be necessary. When they have also stolen our deposits and insurances we are their real domestic animals or worse.
Ellen Brown Web of Debt 1 Dec. 2014 : The mandates of The Financial Stability Board (FSB) that now regulates banking globally effectively acquired the force of law after the 2008 crisis, when the G20 leaders were brought together to endorse its rules. This ritual now happens annually, with the G20 leaders rubberstamping rules aimed at maintaining the stability of the private banking system, usually at public expense.
Left: Ellen Brown
According to an IMF paper titled “From Bail-out to Bail-in: Mandatory Debt Restructuring of Systemic Financial Institutions”, B]ail-in . . . is a statutory power of a resolution authority (as opposed to contractual arrangements, such as contingent capital requirements) to restructure the liabilities of a distressed financial institution by writing down its unsecured debt and/or converting it to equity. The statutory bail-in power is intended to achieve a prompt recapitalization and restructuring of the distressed institution.
Here are some points to note:
What was formerly called a “bankruptcy” is now a “resolution proceeding.” The bank’s insolvency is “resolved” by the neat trick of turning its liabilities into capital. Insolvent TBTF banks are to be “promptly recapitalized” with their “unsecured debt” so that they can go on with business as usual.
“Unsecured debt” includes deposits, the largest class of unsecured debt of any bank. The insolvent bank is to be made solvent by turning our money into their equity – bank stock that could become worthless on the market or be tied up for years in resolution proceedings.
The power is statutory. Cyprus-style confiscations are to become the law.
Rather than having their assets sold off and closing their doors, as happens to lesser bankrupt businesses in a capitalist economy, “zombie” banks are to be kept alive and open for business at all costs – and the costs are again to be to borne by us.
Right: Australian off-sheet derivatives (Barnaby Is Right).
First they came for our tax dollars. When governments declared “no more bailouts,” they came for our deposits. When there was a public outcry against that, the FSB came up with a “buffer” of securities to be sacrificed before deposits in a bankruptcy. In the latest rendition of its bail-in scheme, TBTF banks are required to keep a buffer equal to 16-20% of their risk-weighted assets in the form of equity or bonds convertible to equity in the event of insolvency.
These securities say in the fine print that the bondholders agree contractually that if certain conditions occur (notably the bank’s insolvency), the lender’s money will be turned into bank capital.
However, even 20% of risk-weighted assets may not be enough to prop up a megabank in a major derivatives collapse. And we the people are still the target market for these bonds, this time through our pension funds.
In a policy brief from the Peterson Institute for International Economics, A key danger is that taxpayers would be saved by pushing pensioners under the bus.”
It wouldn’t be the first time. As Matt Taibbi noted in a September 2013 article titled “Looting the Pension Funds,” “public pension funds were some of the most frequently targeted suckers upon whom Wall Street dumped its fraud-riddled mortgage-backed securities in the pre-crash years.”
It is not clear what market there will be for bail-in bonds. In a Reuters sampling of potential investors, many said they would not take that risk again. Whether the pension funds go down is apparently not of concern.
Kept inviolate and untouched in all this are the banks’ liabilities on their derivative bets, which represent by far the largest exposure of TBTF banks. These biggest of profits could turn into their biggest losses when the derivatives bubble collapses.
Both the Bankruptcy Reform Act of 2005 and the Dodd Frank Act provide special protections for derivative counterparties, giving them the legal right to demand collateral to cover losses in the event of insolvency. They get first dibs, even before the secured deposits of state and local governments; and that first bite could consume the whole apple, as illustrated in the above chart.
The chart also illustrates the inadequacy of the FDIC insurance fund to protect depositors : $2.5 trillion in assets today at JPMorgan Chase, the $2.2 trillion at Bank of America or the $1.9 trillion at Citigroup.
All this fancy footwork is to prevent a run on the TBTF banks, in order to keep their derivatives casino going with our money. Warren Buffett called derivatives “weapons of financial mass destruction,” and many commentators warn that they are a time bomb waiting to explode. When that happens, our deposits, our pensions, and our public investment funds will all be subject to confiscation in a “bail in.”
To make it clear, the mentioned IMF Paper writes: The scope of the statutory power
should be limited to:
1. ensuring that shareholders and creditors bear losses, (p.5)
2. Bail-in may need to be coupled with adequate official liquidity assistance.(p.14)
3. writing down or converting, in the following order, any contractual contingent capital instruments, subordinated debt, and unsecured senior debt. (p.23).
I have previously described the unscrupulous character of the NWO. The above underscores that character of elitist contempt of us underlings.