Major commercial banks continue to gamble in a whacky 21st
Century financial arena that nobody understands, least of all them. Instead of shutting risky practices down,
regulators are focusing on how to shut mismanaged banks down. A paper co-authored by the FDIC and the Bank
of England titled “Resolving Globally Active, Systemically Important, Financial
Institutions” makes that abundantly clear. An excerpt from the paper is shown
below.
In view of this, MacDougal recommends that subscribers sell
all equity holdings in commercial banks and redeploy substantial savings and
checking account balances somewhere else.
Your money is no longer safe in a major commercial bank. Take the successful raid on wealth in Cyprus,
where reports tell us the second largest bank on the island is getting shuttered and whales are taking a 40% haircut, as a chilling
harbinger of blindsides to come. Pour yourself an alcoholic beverage, and take a gander at the excerpt:
“Under
the strategies currently being developed by the U.S. and the U.K., the
resolution authority could intervene at the top of the group. Culpable senior
management of the parent and operating businesses would be removed, and losses
would be apportioned to shareholders and unsecured creditors. In all
likelihood, shareholders would lose all value and unsecured creditors should
thus expect that their claims would be written down to reflect any losses that
shareholders did not cover. Under both the U.S. and U.K. approaches, legal
safeguards ensure that creditors recover no less than they would under
insolvency.” (Note: “unsecured creditors” means depositors.)
“It should be stressed that the application of such a
strategy can be achieved only within a legislative framework that provides
authorities with key resolution powers. The FSB Key Attributes have established
a crucial framework for the implementation of an effective set of resolution
powers and practices into national regimes. In the U.S., these powers had
already become available under the Dodd-Frank Act. In the U.K., the additional
powers needed to enhance the existing resolution framework established under
the Banking Act 2009 (the Banking Act) are expected to be fully provided by the
European Commission’s proposals for a European Union Recovery and Resolution
Directive (RRD) and through the domestic reforms that implement the
recommendations."
