Rob Kall: OK, so the
Troika is not a Cyprus group of people, this is from the Europeans Union and
one of these giant global organizations.
Ellen Brown:
Right. And the Cyprus government
objected! They refused to go along with
it. So the Troika then said, "OK, we
won't take the insured deposits, we're going to go after the uninsured
deposits." Well, they wound up taking
60%, last I heard, of the uninsured deposits.
That's a huge sum of money!
People weren't too bothered by it, because they said, "Well, those are
the Russian Oligarchs, and they were using those banks as tax havens, and they
deserved it," or whatever. But those
weren't all Russian Oligarchs. It also
included the pension funds of the ordinary Cypriots. Anything over 100k Euros would be
confiscated, or 60% of it was confiscated.
Well, the big funds tend to be the money of a lot
of ordinary people, the big pension funds.
It also included businesses: ordinary Cyprus businesses that need to
keep cash around to pay their employees, etc., all the things they do with
their money; so there were a lot of people seriously hurt by that. But that is supposedly the new template: that
they will go after depositors' funds.
Now, say in the US: the theory would be they can go after the depositors
funds. All that money just goes into a
pool, and when the derivatives players come for it, they get to go first; so
they're going to grab all the assets, and there just isn't going to be anything
left. If you have a trillion dollar derivatives
bust and a trillion dollars in deposits, it's just all going to be gone.
So then supposedly the FDIC steps in and pays out
to pay the insurance claims; but the FDIC fund only has 25 billion dollars in
it, and Bank of America alone has a trillion dollars in deposits to be covered
here. Obviously there's not enough in
the fund, and the fund is (supposedly) funded by premiums from the member
banks. When they went eight billion in
the hole in 2009, they imposed this special assessment on all the banks, and it
was crushing for the little banks. And
that was just for 8 billion. Now what if
you had a trillion dollar or a half a trillion dollar [hole], or anything way
over 25 billion? You're going to have to
do a special assessment on all the member banks, crushing all the little banks;
or you're going to have to go to the government, in which case the government
is going to say, "Well, under Dodd-Frank we're not going to bail you out in
this circumstance, so it's not our problem."
They're just going to take the depositors' money; and they'll say,
"Well, it's been approved, it's in these bail-in provisions, that's what we're
supposed to do, and we've done it," just as they did in MF Global.
Rob Kall: So, where
does Public banking fit into this picture?
Ellen Brown: Oh. There's on more element to all this, which is
the secure deposits. The unsecured
deposits would include our ordinary deposits; but secure deposits include the
State and local governments, because they require that when they put their
money into a bank, they often keep their money in Too Big To Fail Banks,
because these little local banks just aren't big enough for their needs. Like California, I think, at one time had 17
billion dollars in deposits. But last
time I looked it was like 2 billion, so I think they moved that money into
something longer term.
But they still have a lot of liquidity, and they
keep that in the TBTF banks. They
require that collateral be posted, so supposedly there would be that amount in,
perhaps, government securities that would be the collateral for these
government revenues that are deposited in their banks. But the derivatives claims go before
everybody else, including the other secured creditors! Even the State and local governments' money
is going to get wiped out by a big derivatives bust at JP Morgan or Bank of
America.
Plus, you have all these other linkages, like if
you have your money in the stock market, and you're between sales. Let's say you have a big chunk of money
that's just sitting there in their money market waiting to buy another
stock. That money all goes in overnight
sweeps into the TBTF Banks; and they're quite likely to go bankrupt overnight,
or over the weekend. That's what they
typically do. So they'll have all that
money from all these other banks, or from stock markets, or from the Credit
unions. They do their dealings with the
big correspondent banks, which are TBTF banks.
So there are all these "Who knows?"
All these little networks of whose and what money is going to be in that
pool when it decides to go bankrupt, and who all will be affected.
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