In the wake of bail-ins as the new bank resolution method of choice throughout the entire Western world, our friends at Demonocracy have released a MUST SEE infographic on the FDIC illusion of insured bank deposits.
The infographic gives a visual view on the size of FDIC’s fund vs. the total deposits that the FDIC covers.
What happens to the rest of deposits in the event of a banking crisis? Well, that’s what bail-ins are for!
Full infographic is below: [Read more...]
*BREAKING SD ALERT*
Editor note: Bringing this massive story back to the top of the news feed for those who missed it over the holiday weekend.
On Wednesday, SD broke the news that Canada had buried a provision for depositor bail-ins for systemically important banks deep inside its official 2013 budget, and stated that the Cypriot bail-in was not just a one-off event, but is in fact the new collapse template for the entire Western banking system.
We suspected that the same policy change had been made by the US & the UK, but was simply yet to be discovered, buried in the website of a Federal agency.
We suspected correctly… [Read more...]
What is more likely to hurt you is what you think you KNOW that is WRONG. What you don’t know is often not that important. Consider a few examples:
Cyprus Bank Accounts. MF Global. Social Security. Retirement Accounts. Europe in 1913. Real Estate. The dollar is as good as gold.
There are many other examples, but the essential truth is simple: For the most part, we are ignorant of many ideas and events in the world, and it rarely matters. But, what is often costly and destructive are the ideas and beliefs that we think are true – when in fact they are quite wrong.
Our savings and retirements are at risk when we invest them based on beliefs that may be incorrect. This is one of many reasons why people buy gold and silver – for insurance against unexpected events. What if our perception of financial reality is incorrect or if we are ignoring financial reality? Ayn Rand said it best, “You can ignore reality, but you cannot ignore the consequences of ignoring reality.” [Read more...]
SD contributor AGXIIK warned readers months ago about the FDIC’s expanded deposit insurance which was set to expire Dec 31st, predicting that the expiring expanded deposit insurance enacted in the wake of the 2008 financial panic could trigger a bank run.
Many scoffed at the report and its implications, due to the fact that the story received zero attention by the likes of Bloomberg, CNBC, or even ZH.
It appears that the expiring expanded FDIC insurance has in fact triggered a massive deposit withdrawal at the nation’s largest banks, as the Fed is reporting that $114 billion were withdrawn from the largest 25 US banks over the first week of January, the largest fund outflow since the 9/11 attacks, even exceeding the pace of the outflow during the 2008 financial panic!
With the media fixated on the fiscal cliff, no one seems to be noticing the fact that the FDIC’s expanded 100% coverage for insured deposits ends January 1st, 2013.
Submitted by SD Contributor AGXIIK:
As of January 2013 the FDIC stops offering 100% coverage for all insured deposits. That amounts to $1.6 trillion in deposits, 85-90% deposited with the TBTF mega banks. Once the insurance ramps back to $250,000 the FDIC risk amelioration offered to large depositors will cause them to flee from the insecurity of the much reduced FDIC coverage. This money will rotate immediately into short term Treasury securities. The treasury, in order to handle this flood of money, will immediately offer negative interest rates. This financing will resemble the .5% negative interest rate offered by the Swiss and Germans on the funds flooding to their banks from Spain, Greece and Italy.
This will be a bank run much larger than the Euro banks flight to safety.
[Read more...]
Welcome to Capital Account. Wall Street banks, including Morgan Stanley and Goldman Sachs, are looking to help their foreign customers skirt new US regulations for over-the-counter derivatives. The banks found ways to route trades via non-US affiliates, exploiting the lack of a precise definition for what constitutes a “US person.” Wall Street’s attempts to circumvent regulations may not come as a surprise, but what is the antidote? We talk to Former FDIC chairwoman Sheila Bair about her experience as a regulator during the financial crisis.
Plus, both the US and the EU have pushed back deadlines to implement the Basel III capital requirements; the Basel III framework more than triples core capital requirements for lenders. Our guest, Sheila Bair, spent much of her career at the FDIC fighting to increase capital requirements, and was critical of the Basel II framework, which let big banks evaluate their assets with their own internal risk models. [Read more...]
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