What are Bank Bail Ins? I'm sure you will be familiar with a bank bailout, as these caused outrage during the 2008 crisis, where the government used taxpayer funds to bailout the banks. And this was quite rightly the biggest scandal in modern h…
What are Bank Bail Ins? I'm sure you will be familiar with a bank bailout, as these caused outrage during the 2008 crisis, where the government used taxpayer funds to bailout the banks. And this was quite rightly the biggest scandal in modern history. A bank bail in is where the bank can TAKE your money or savings and actually turn it into worthless bank stock. Oh, and this is 100% legal. The USA passed a law in 2010, known as “Statutory Bail-Ins” which includes expanded powers to the Federal Reserve, the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC), whereby bank holding companies and significant non-bank holding companies can be placed in receivership under federal control with the FDIC acting as receiver. The IMF then produced a paper on Bail Ins on the 24th April 2012, where a new plan was created for solving banking crises, this included a ‘bail-in’ mechanism that they say, and I quote: aims to ensure that banks’ shareholders and creditors pay their share of costs, the keyword here is ‘creditors’ - that’s what you and I are - we are bank creditors - and I’ll explain that absurdity in a moment. And just 11 months after this IMF paper was released, the first case of Bail-in was authorised in Cyprus in March of 2013. So what happened? Well, the bank ‘bailed in’ 21,000 savers who had ‘deposits’ in their bank. Anyone with more than €100,000 in their account, saw roughly 50% of their savings converted to equity making them 81.4% owners of an insolvent bank. In other words, they got scammed. Because who wants to own a bankrupt banking stock? And how is this legal I hear you ask? Well, when you deposit money into a checking, current or savings account, that money no longer belongs to you. Technically and legally, it becomes the property of the bank, and the bank provides you with a promissory note or an IOU. As far as the bank is concerned, your savings are an unsecured loan to them, for which they pay you interest on that loan. Even if that’s a rate of 0.000001%. After the success of Cyprus in 2013, bail In law was passed pretty much everywhere where a modern banking.
