FWIW, article from Infowars;
FDIC officials discuss how to deal with approaching market collapse and prevent bank runs
Thank you for making us aware of this information. I watched the video on the webpage. It was long and strenuous.
I am giving 'my take' on what I heard in the video because information is suppressed; the public is being kept in the dark.
I think it is important to stay tuned so as not to be immobilized when things happens.
This post has three parts.
1) Some information I gathered from the video.
2) Some acronyms with short explanations.
3) Information from Investopedia which is a "Cliff Notes" explanation of the Dodd Frank machinations they have imposed on us.
If the first 2 parts are dull, skip to the 3rd for the 'powerpoint' explanation.
Part One
My Opinion: Bank and global financial system failures seem to be one of Main Agenda items, on the same "short list" as destruction by fabricated wars, death by the medical consortium, and control by famine.
It seems that our beloved concept of FDIC insurance is passe, the Dodd-Frank Act has taken over (created via the 2008 problem/reaction/solution process), the crash will be global ("cross-border"), the first bank default(s) will occur on a weekend, there will be runs on banks, the crash will entail a whole
cascade of events, it will be a shock to the system, and FDIC and Big Gov't will come in and 'save us' by using our personal savings and retirement funds to bail out institutions that they consider "too big to fail." "Too big to fail" seems to mean any money-laundering ponzi organization that the PTB need in order to continue their machinations and preserve their quality of life. The small banks don't matter -- small depositors can take them over by getting (possibly worthless) bank shares in lieu of their hard-earned money. In the process, the citizen covers all the costs, pays all the prices, and becomes the pauper. But The Regime marches on -- maintaining, or improving, its status quo.
Video Summary
Disclaimer: When it comes to Dodd Frank financial matters, I have no idea what I am talking about. The Dodd Frank Act is (deliberately, I figure) complex and convoluted. So, this is just my limited and uneducated interpretation of what I heard on the video. There is better information on the web and FDIC website.
Since the video is available to the public, the participants mince words, over-use acronyms, repeat euphemisms, and engage in a lot of deliberate word salad splattered with pseudo-language which clearly indicates they are either really stupid or have something to hide. They are clearly not stupid (in one sense, anyway).
For example, one person literally states,
"A huge challenge is what to do with a bank which has a balance sheet where there's equity and deposits and nothing in between." Say what? You have to interpret or read between the lines to figure out what they are talking about. To me, "
equity + deposits and nothing in between" COULD mean a successful -- vs failing -- bank. But they won't come right out and say that. Oddly, this kind of bank really worries them. They ask
: How do we handle such situations? Can we impose the financial burden of large bankrupt institutions on such a bank?
Some Key Points from the Video
- There seem to be two main points of systemic failure: large banks and large non-bank central clearinghouses (CCP).
[In the U.S., a CCP is called a derivatives clearing organization (DCO) which is regulated by CFTC-Commodity Futures Trading Commission. They are concerned about the level, or lack, of coordination between FDIC & CFTC when failures occur. Other countries don't seem to have the same problem.]
- The goal of this video group, and the goal of the resolution (failure) rules, and everything enacted into law is designed to "protect adverse effects on US financial stability" (2:23). Apparently "US Financial Stability" does NOT take into account the well being of its citizens. Regarding proper interpretation of their use of the term financial stability, and the function of the Organization of Financial Stability, reference SOTT article The aristocracy is eating the peasants
- Many terms are unknown to me and had to be searched (e.g., bail-ins, bridges, haircutting [reduce your bank deposits by x%], waterfalls, Quantum, clearinghouses, "resolutions" [a euphemism they cling to like a life preserver, meaning financial institute failures]). Not once did I hear the word "depositor" or "deposits," despite the fact that it is our money they intend to steal, "legally," to cover their ponzi tactics.
- At some point, a lengthy posting of all their acronyms and terminology, with explanations, could provide a lot of clues to their strategy and tactics.
- The key players in this global financial manuever are Bank of England, Fed, SEC, CFTC-Commodity Futures Trading Commission (US agency overseeing derivatives, futures, swaps, options) & FDIC.
- There are quotes in the video re timing. Bank failures are apparently planned for a weekend: "The message that we will send out on Friday night." They state, "There is a decision making authority about when and which weekend institutions fail on so we hope we will not be resolving multiple institutions at the same time." (1:54)
- They claim to not know what exactly will happen or when, but they expect "it" to happen very quickly with little or no warning.
- They use phrases like “WHEN [not if] the time comes."
- They state "Large banks will almost certainly fail due to a run on liquidity," "40-50% of depositor accounts are uninsured," How saleable are these [financial] institutions under resolution? There will be a very limited set of possible acquirers. The firms might have to be broken into 'buckets' to sell them. We may have to do bail-ins and have investors take them over.
- They continue to say they may have to escalate from Title I to Title II (but this is obviously the plan).
- They talk loosely that losses will be allocated (but they never specifically divulge how they are allocated). There are many euphemistic statements like "compensation claims are subordinated to general creditors and prior compensation can even be clawed back" -- which means what? but nonetheless this seems like a horrific red flag for depositors.
- As they focus on protecting government/corporate/PTB wealth by using citizen funds, one person states Maybe we need to consider what to do about Joe's Auto Shop which will need funds to pay its employees each week. The reaction was silence, so it seems (a) a lot more work must be done before things actually start to happen, or (b) there's lots of room for total chaos when they start.
- There was talk of "transparency." Summarized comments are, I think you would scare the public. They would ask why are you telling me this. There could be unintended consequences of blasting this out to the public. They have more faith in the banking system than people in this room do." One woman wants more information to be available to the public, "but not the whole hog." They want transparency "that will lend stability in a negative outcome."
- They are very concerned about the appearance (versus the reality) of transparency and want to ensure general public audience confidence in the process and the FDIC. One fellow suggests that transparency would be more effective if it were "accurate." (ha! good for him). They intend to publicly fire a bunch of "culpable" managers -- probably so the public can blame someone and be satiated with some lynchings. Dream on.
- They are quite concerned about non-bank financial institutions. The timing of CCP clearinghouse failures is less controllable; they can't plan for it to occur on a weekend. Prices will move rapidly in the market, and things could get out of control, but they hope their stepping in will inject "stability."
- According to Sir Jon Cunliffe, Deputy Governor for Financial Stability Bank of England: If non-CCP institutions fail, the CCP will have an imbalance on its spreadsheets -- they'll suffer a loss in relation to their collateral and there will be rapid effects. CCPs could 1) absorb losses (but they have no capital, so that doesn't work). 2) Pass their losses without limits back to their clearing members using established loss allocation rules. 3) Use the pre-funded default fund. 4) When the default fund is depleted (which will occur quickly), the CCP makes cash calls (possibly multiple cash calls) on the remaining members. 5) Then they "haircut"/vary margins to members. 6) They tear up some or all of the contracts they have. 7) Since they can't go bankrupt; they just disappear.
- Cunliffe states, "The equity of the owners is untouched in that process." [Really? Who are these owners? I couldn't find them.]
- NDL Non Default CCP losses are clearinghouse losses related to operations/business/legal risks, cyber risk, & fraud. "This is a really big problem," they state. NDLs cannot be allocated to members. The "general audience public" can't bail them out. Most of the default rulebook cannot apply. This group is not authorized to take the actions they'd like to, and it could lead to almost immediate failure of the clearinghouse. BOE wants to ensure that "Resolution Authorities" are involved quickly in NDLs so they can act outside the rulebook to protect special interests. Measures are proposed in Parliament now to ensure they get these "extra powers" [including intervention, decision-making and rule-making]. Cunliffe also suggests they should increase the default fund since a) owners have no "skin in the game;" b) members might refuse cash calls -- although that would immediately put them in default; and c) issuing bonds to cover losses could have some serious consequences.
Part Two: Summary of Some Definitions Use in the Video
Dodd-Frank Act /Authority allows the FDIC to resolve a large bank holding company or a systemically important non-bank financial institution when its default would have serious adverse effects on the financial stability of the United States.
"We do not have the framework, infrastructure, authority in place on the non-banking side [i.e., CCP] that we have on the banking side." But: "They are going to happen at the same time."
Title I gives line of sight into the companies' financial status, and authority to get them to make changes and design plans to facilitate bankruptcies.
Title II gives authority to supervise default processes for banks and global systemic banking organizations in order to inflict an orderly and fast liquidation fund backstop (i.e., no bail-out).
TLAC (Total Loss-Absorbing Capacity) is an international standard, finalised by the Financial Stability Board (FSB) in November 2015, intended to ensure that global systemically important banks (G-Sibs) have enough equity and bail-in debt to pass losses to investors and minimise the risk of a government bailout. (TLAC rules were changed in 2020 which appear to increase the chances for bank failures.)
FSOC Financial stability oversight council: #2 To promote market discipline by eliminating expectations on the part of shareholders, creditors, and counterparties of such companies that the U.S. government will shield them from losses in the event of failure.
CCP Central counterparty clearing houses emerged from the 2008 crisis as lynchpins of the global derivatives markets........By standing in the middle of a trade, the CCP assumes the credit risk of each side of the trade [buyer and seller]. When a member defaults because of extreme (not “normal”) market conditions, then contributions and resources of all members would be called upon to support the CCP if the defaulting member’s own collateral and contributions together were insufficient. The video noted that, since 2008, 60% of credit derivatives now go through CCP. Before only 10% did. Today 85% of interest rate contracts go through CCP. Before only 40% did.
CCPs now play a huge role in commodity markets, particularly hedging and forward contracts.
Regarding Sir John Cunliffe/BOE He says, "The Committee on Payments and Market Infrastructures (CPMI) deals with life; the Resolution Authority deals with death...." Ultimately,
"ll costs are passed back to users. There is no way users can avoid the costs.
Cunliffe's video section starts at 2:32:17 to the end. He speaks comparatively clearly if anyone is interested in watching just a portion of the film.
When searching information on-line, it became clear that
Not everyone is keen on Dodd-Frank. For example:
2014: "
Dodd-Frank has drawn fire as encouraging, rather than preventing, bailouts. Detractors urge repealing Title II of Dodd-Frank and amending the Bankruptcy Code to include a new Chapter 14 in its place.....with it's starkly contrasting aims of reorganizing troubled companies, preserving going concerns and maximizing payments to creditors."
2018:
The Trump Administration and Republicans have initiated efforts to repeal certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), one of which is the
Orderly Liquidation Authority (OLA) under Title II of Dodd-Frank.
2014:
FDIC Coverage And Dodd Frank – What It Could Mean For Your Deposits:
---OLA "Orderly Liquidation Authority" receivership rules state that the Federal Reserve and FDIC now have the authority, under financial distress, to convert your cash deposits, savings, and CD's at the bank into equity shares of the bank itself in order to make the bank whole. This is often called a "bail-in."
---OLA permits the FDIC to repay the banks obligations to its depositors with stock instead of cash. OLA permits conversion of the banks obligations to its depositors, ie savings accounts, checking accounts, CD's, to stock.
Part Three: INFORMATION FROM INVESTOPEDIA
Investopedia (and many other sites) has some human-language clarifications and suggestions, summarized below:
- Big banks got government (taxpayer) bailouts in 2007-2008.
- Financial reforms ushered in with the Dodd-Frank Act eliminated bailouts and opened the door for bail-ins.
- Rather than bail out banks, the federal government shifted the risks to creditors by allowing financial institutions the ability to use debt capital to keep themselves afloat. This means that debtholders, unsecured creditors, shareholders, and depositors can be responsible for problems within the financial sector.
- Bail-ins allow banks to convert debt into equity to increase their capital requirements.
[One person in the video defined "bail-in" as turning the bank over to its creditors. 2:06]
- They shift the risk to unsecured creditors, including depositors whose account balances exceed the FDIC limit of $250,000. [Whether this $250k insurance coverage will hold, I cannot discover. There are internet comments that contest that the $250k will be convertible to cash, on-call. There are also internet comments which hypothesize that if you have $260k in one bank the entire amount will be subject to the bail-in. It is not clear to me, and probably isn't meant to be.]
Bank Bail-In vs. Bank Bail Out
Bail-ins and bailouts are designed to prevent the complete collapse of a failing bank. With
bailouts, the government injects capital into banks, enabling them to continue their operations. During the financial crisis, the government injected $700 billion of taxpayer funds into Bank of America, Citigroup, AIG, and others.
Under bail-ins, banks use money from their
unsecured creditors, including depositors and bondholders, to restructure their capital to stay afloat. Put simply, they can
convert their debt into equity to increase their capital requirements. Although
depositors run the risk of losing some of their deposits, banks can
supposedly only use deposits in excess of the $250,000 protection provided by the
Federal Deposit Insurance Corporation (FDIC).
Unsecured creditors, depositors, and bondholders fall below
derivative claims. Derivatives are investments that banks make among each other, which are supposed to be used to hedge their portfolios. However, the 25 largest banks hold more than
$247 trillion in derivatives, which poses a tremendous amount of risk to the financial system. To avoid a potential calamity, the
Dodd-Frank Act gives preference to derivative claims.
Bail-Ins Become Statutory
The provision for bank bail-ins in the Dodd-Frank Act was largely
mirrored after the cross-border [global]
framework and requirements set forth in Basel III International Reforms 2 for the banking system of the
European Union. It creates statutory bail-ins, giving the
Federal Reserve, the FDIC, and the
Securities and Exchange Commission (SEC) the authority to place bank holding companies and large non-bank holding companies in receivership under federal control.
Europe Experiments With Bail-Ins
One of the key examples of the use of bail-ins was in Cyprus, a country saddled with high debt and the potential for bank failures. The country's banking industry grew at an alarming rate after Cyprus joined the
European Union (EU) and the Eurozone. This growth, coupled with risky investments in the Greek market and risky loans from two large domestic lenders, led to the need for government intervention in 2013. A bailout wasn't possible.......Instead, it instituted the bail-in policy,
forcing depositors with more than 100,000 euros to
write off a portion of their holdings—
a levy of 47.5%.
.....These bail-ins may become more widespread. Investors are concerned that the increased risk to bondholders will drive yields higher and discourage bank deposits. With the banking systems in many European countries distressed by low or
negative interest rates, more bank bail-ins are a strong possibility.
In 2013, the EU introduced resolutions to make the bail-in a common principle by 2016 in response to the effects of the
European Sovereign Debt Crisis. It transferred the responsibility of a failing banking system from taxpayers to unsecured creditors and bondholders,
the same way Dodd-Frank did in the United States.
How to Protect Your Assets (according to Investopedia)
Bail-ins are the new norm. Banks have the authority to take control of any capital that fits the criteria as per the law. This means anyone who has an account that exceeds the $250,000 insured limit may be affected. Anything above that amount can be used for bail-in purposes. If you want to protect your assets, here are a few tips you may want to take into account:
- Keep a watchful eye on the performance of the financial markets and financial sector
- Ensure the financial institutions you choose are financially secure and stable
- Spread the risk by diversifying your money and assets across different banks and countries
- Keep balances at or below the $250,000 limit
- Make sure you monitor any changes to federal government policies about bank deposits
- Don't bank with any institution that has large derivative and mortgage books, which can be risky in times of crisis
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To quote Cass: Fear Not. Knowledge Protects, Ignorance Endangers.
And as one author notes, "It is very easy to be desperate; life offers us these opportunities every step of the way. For some people, it is good to be desperate all the time. It results in
ceaseless prayer, and ceaseless prayer will get you enlightened—you will see the light."
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