We have all been conned, hoodwinked, bamboozled into thinking that “money in the bank” is a good thing. It is not. Remember Cyprus? Money in the bank potentially makes YOU a potential loser.
The ‘guidance’ of the BIS, BoE, and Fed regarding the Cyprus situation was purposely vague, misleading, and overly technical because to plainly cite the legal situation would send everyone running to their bank with their hair on fire to immediately withdraw their funds. In summary, this is exactly how “money in the bank” works:
- When you deposit YOUR money in the Bank, you transfer ownership of that money to the Bank. It becomes THE BANK’S MONEY and as a depositor you instantly become an unsecured creditor.
- You have a ‘claim’ on an equal sum of money and can ask for it back.
- If the Bank won’t return an equal sum to you, it can be sued under tort law, so long as the Bank is solvent… providing you ask for your money back.
- If the Bank is broke then as an unsecured creditor you wind up with pennies on the dollar or even zero since secured creditors of the Bank get paid first.
This is the British LAW. For reference, it was established under UK law in 1848 by ‘Foley vs. Hill.’ Once a deposit has been made into a Bank, the Bank becomes a debtor and the depositor a creditor. You have pointed out similar precedents in US law.
The Bank has NO trusteeship or fiduciary duty to depositors, and cannot be prosecuted under criminal law (a) Eric Holder was RIGHT on this point, and (b) not surprised that he did not cite the exact legal reason in his statement – Banks cannot be held liable to depositors for gambling (think ‘OTC derivatives’ the same known as swaps) or misusing (think risky loans, bad investments, sovereign bonds like Greece, or huge bonuses to themselves).
Almost universally, depositors think that money in the Bank is THEIRS. It is NOT. Almost no depositor thinks of themselves as a creditor, much less an unsecured creditor. This is the Bankster game in plain sight. It’s almost as funny as the saying ‘sound as a dollar.’
In closing, with a respectful hat tip to Mr. Jim Sinclair, it’s time to start getting out of the system.
As Bank depositors learned in Cyprus, that money IN the Bank isn’t really there for them when things go South. How many of them do you think now wish they had their assets outside the system before it blew itself up?
In Cyprus the money was never in the bank. It blew up a long time ago. The statements depositors received were cartoons that could only function as long as the Ponzi plan worked. The losses ripped through the bank’s capital a long time ago, and hammered the banks cash position which is the depositor’s accounts.
The money was already far gone well before the supposed blockage and confiscation
of over 80% of the deposits of large accounts over 100,000 EU.
There was a minor bail out in Cyprus but not of major depositor’s money.
Does this situation exist elsewhere or everywhere?