Greek banks prepare plan to raid deposits to avert collapse.

[former9thward]

Greek banks are preparing contingency plans for a possible “bail-in” of depositors amid fears the country is heading for financial collapse, bankers and businesspeople with knowledge of the measures said on Friday.
The plans, which call for a “haircut” of at least 30 per cent on deposits above €8,000, sketch out an increasingly likely scenario for at least one bank, the sources said.

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email [e-mail] to buy additional rights. http://www.ft.com/cms/s/0/9963b74c-219c-11e5-aa5a-398b2169cf79.html#ixzz3f3IifLnH

A Greek bail-in could resemble the rescue plan agreed by Cyprus in 2013, when customers’ funds were seized to shore up the banks, with a haircut imposed on uninsured deposits over €100,000.

It would be implemented as part of a recapitalisation of Greek banks that would be agreed with the country’s creditors — the European Commission, International Monetary Fund and European Central Bank.

http://www.ft.com/cms/s/0/9963b74c-219c-11e5-aa5a-398b2169cf79.html#axzz3f3HkDkTc

[libdem4life]

1. Does that mean kind of a legal reverse bank heist to pay off the bank's debts? Sure hope the "hair"

grows back for the people's sake.

[magical thyme]

2. since Cyprus, bail-ins are the rescue du jour.

Iirc, even the US now has a bail-in policy in place.

Edited to add link to something on it:
"An interesting series of commentaries starts with one on the website of Sprott Asset Management Inc. titled "Caveat Depositor," in which Eric Sprott and Shree Kargutkar note that the US, UK, EU, and Canada have all built the new "bail in" template to avoid imposing risk on their governments and taxpayers. They write:

[M]ost depositors naively assume that their deposits are 100% safe in their banks and trust them to safeguard their savings. Under the new "template" all lenders (including depositors) to the bank can be forced to "bail in" their respective banks.

http://www.huffingtonpost.com/ellen-brown/bailout-is-out-bailin-is-_b_3178702.html

Basically, they are saying that a depositor's money in a bank is actually a loan to the bank and if the bank is going down, then as a creditor to the bank the depositor stands in line with all the other creditors to get back his/her money.

This is what he meant when Obama promised us that the taxpayers would never have to bail out the banks again. That the depositors will be paying instead.

Got the warm and fuzzies yet? So glad my $$ is in a credit union.

[libdem4life]

3. It's a new term. So, they take depositors funds at will and use them to pay off their debts so that

the depositors can keep some of their money? Wow, and they call Bernie a Socialist. But I must be missing something.

[magical thyme]

4. you missed nothing.

see my edited post above, with link to Ellen Brown article on bail-ins.

[Recursion]

6. It's an old concept; that's how banking has worked for 600 years

Deposits are a liability to the bank; not money the bank holds.

[Cleita]

9. That's the principle and the loans made are the assets. eom

[libdem4life]

12. Perhaps I should have put it differently...I know banks lend out money for interest, and they

also used to need 10% on hand at all times, which they don't do anymore.

But a "haircut" as suggested in Greece is taking money to pay off their debt, instead of putting it in the market for a profit for the bank but the funds are "there". I don't read anything about repayment...which is not likely if it goes to pay off debt rather than raise interest on the market.

[Cleita]

15. I don't know either. It just seems to me that shaving off the money of some depositors will lead

them to bank somewhere else, especially if they are rich and they can. That removes cash from the country and that isn't good. I would go to the loan or asset side of the ledger and sell off some of those assets to other lending institutions to meet an emergency. Our banks here do it all the time. It's kind of like taking your jewelry to the pawn broker when you need money instead of putting more debt on your credit card.

[libdem4life]

21. When I was younger, I remember asking about the FDIC insured to $250,000 posted in most of the banks

I was told that it was just for reasurrance, that people had much more than that but the "full faith and credit" of the US guaranteed it. Not that I ever had that much. But what does Federally Insured mean if the Federal Reserve banks are private banks? It isn't in the Federal Budget.

Let's hope Bernie will become our new 'Splainer in Chief, as I don't think I'd trust the Clintons on that one anymore.

[Cleita]

24. I one worked in banks and I often questioned just how insured things were in case of a crash

like in 1929. Mostly, the answers I got from the bankers were many variations of, "we are fucked". The FDIC can bail out individual institutions that hit bottom, but not all of them at once. Although the FDIC is private, it does have a fellating relationship with our Treasury which is supposed to back it up when it goes oops!

[libdem4life]

26. Best. Reply. Today.

[jwirr]

33. When I asked that I was told ten cents on a dollar. Was young and did not know what they

meant.

[Recursion]

34. Deposits are not principal

Banks do not lend out deposits. Banks create money with each loan oigination.

[Cleita]

35. I said principle, which in this case means a rule of bookkeeping, not principal which is

cash or other assets.

[Recursion]

36. Oh sorry I read that too fast (nt)

[libdem4life]

10. Yikes...thanks for the edit. So that means no more FDIC? Gallows humor. I'm going to take my

paycheck and lend it to the bank??? Also, aren't most all depositors taxpayers? So it's just taxpayers with bad luck or bad karma who lose their money in certain banks?

[magical thyme]

20. the FDIC doesn't have even close to enough funds to cover all depositors in a major banking

collapse. They are all so overexposed it's terrifying.

I do think there are limits on it -- up to a certain amount is protected, so the average person should have other things to worry about in such a scenario.

[jwirr]

25. Won't this just encourage an under the mattress policy? I would not deposit my check under those

rules.

[magical thyme]

27. those rules exist as we write. they also explain why some financiers are pushing to ban paper/coin

altogether, and do it all electronically. That's also why the banks/feds increasingly track and flag smaller and smaller amounts of money. For a while it was $10,000, then $5,000. Now the local credit union looks at me sideways if I withdrawl $500 for a COD. I just tell them I'm buying heating oil, so they think I'm filling my tank again. The financial side of the "war on terror" is really the war on cash so you and I will be at their total mercy.

It's happening in Europe right now.

[jwirr]

37. I am on Social Security so when the government came out with the Direct Deposit idea I joined.

I thought I was getting away from banks because the money was going to come to me directly from SSA. Then I get my first statement and my bank is Comerica in Texas. Sure it is a federal bank but it is still a bank. That is where I learned about what you are saying about no cash.

From what I understand is that all of this is money on-line and has little to back it up. One more question - why do our grocery store and heating oil provider even take this payment from a bank they know cannot back it up? Just part of the game? Of course the government does not just hand anyone the money in my account and supposedly they would not just hand some over for this kind of coercion but who knows.

The bigger the problem gets and it is every day - the more I doubt that even Bernie is going to be able to fix it. These guys are out for blood. But then he has the right idea - no one else seems to know what to do to stop this insane take over by the banks and the corporations. Finally I know what the deer in the headlights feel like.

[Cleita]

39. Not only that they bribed us to do it by giving us a little extra if we did. I did because there was

a problem of SS checks being stolen from mail boxes but the solution turned out to be another way for the banksters to make money from our Treasury.

[jwirr]

40. I know. And the banksters wonder why we hate them.

[Liberal_in_LA]

5. that is harsh

[Recursion]

8. The alternative is smaller depositors losing everything

Not sure why that would be preferable.

[magical thyme]

11. it's the new reality, and not just in Greece or the EU

it's one of the new rules here in the US. That supposedly taxpayers will no longer have to "bail-out" the banks. Instead, deposits are now considered loans to the bank and depositors stand in line with the rest of a banks creditors in order to get their "loans" back.

Personally, I'm planning on spending my money from here on out. First on fixing up the house (insulation, wood stove, solar if I can get there), and then I'll spend it on durable goods so I never have to buy toilet paper, soap, toothbrushes, toothpaste, booze, again for the rest of my life, and have surplus to barter if/when the banks go down.

[libdem4life]

13. Me, too. Hunker down. It doesn't take that much to live comfortable in some places.

[former9thward]

14. If I buy all the booze for the rest of my life

I just won't have the storage room for it.

[TBF]

16. But you'd have friends -

maybe we can have a DU get together at your place? lol

[libdem4life]

23. You could store it at my place???? LOL

[magical thyme]

28. good thinking. I have huge attic space -- you're welcome to store it with me

[jwirr]

29. And what happens to the savings, pensions and retirement accounts?

[magical thyme]

31. I think there are limits below which they do not touch

but I could be remembering wrong, and didn't see the actual bill so am relying on memory of articles I've read about bail-ins.

[jwirr]

38. I am feeling very sorry for the people who are saving in personal retirement accounts - they

actually think they are safer than Social Security.

[hughee99]

43. Yes, SS is guaranteed, unless politicians decide

To change the payout, but that could never happen.

[jwirr]

44. LOL. My dad used to tell us that we needed to get educated because that was the only thing they

could not take away from us. He only graduated from the eighth grade but he was a very smart man. Much of his was self education. He read everything he could get his hands on.

[Cleita]

45. I always thought the same. The only thing no one can take away from me is what I know. n/t

[jwirr]

46. And we are definitely beginning to see it is true.

[magical thyme]

32. ah, here's a link to the definitive article on bail-ins from Ellen Brown.

http://ellenbrown.com/2014/12/01/new-rules-cyprus-style-bail-ins-to-hit-deposits-and-pensions/

Note that although it starts out about Cyprus, the rules cover the G20 and she shows US position/perspective. Warning: it's not pretty.

[jwirr]

42. Ouch. There is nothing left that the 1% do not own. God help us all. A strong wind could knock it

over.

[Munificence]

30. I hear you

I only keep a few $k in the bank for bills and such. I mean why even use a bank? What they'll give you a whopping 1/2 percent? Haha that is laughable.

I cashed out a couple of years ago, purchased 13 acres with a nice 2800 sqft cedar sided home, a real stone fireplace, a creek running through the property that comes out of a cavern, a well, and a nice guest house. I went from being a small business owner to checking out from society. My days are now spent tending a 60x100 ft garden, cutting firewood, chasing my free range chickens, tending to my honey bees and trying to teach my young children responsibility and how to provide for themselves. Best investment I ever made was for my engineering degree...has paid me back in full in doing all the work (fixing broken stuff) here on the homestead.

Lost 40lbs and am in the best shape of my life. I weigh the same in my 40's as I did in 8th grade (146lbs). I am also a combat soldier and in a lot better shape than I was in the Army 25 years ago even then I could max my PT tests. Heck, I'd chew up and spit out the younger version of myself. I've sweated a lot over the past few years doing back breaking manual labor here on my place and god damn it I love it. Nothing like knowing you are alive vs being a slave to the system.

Our little 800 sqft guest house is my canning and storage house. It has a full kitchen and the cupboards are packed with food stuff and canned goods.

Why just today I picked 10lbs of zucchini, 30 or so bell peppers, 10-15 tomatoes, 2 eggplants and a few cucumbers. Sweet corn will be ready next week. Got 4 eggs today so far.

My rooster is my alarm clock and the stars are my lullaby.

I posted this here (DU) and will share again as a teaser. last year I decided to "update" the outside of my place (both guest house and main home). I wrapped up 225 hours of hard labor and $1800 worth of cost (stain and paint and a few boards for my decks).

Before:

[IMG][/IMG]

After:

[IMG][/IMG]

Guest house B4:

[IMG][/IMG]

After:

[IMG][/IMG]

The raised beds in front of the guest house is now my herb garden. I picked up all those rocks to make the raised bed/flower garden from my property.

[Cleita]

7. They need to nationalize the banks like Iceland did and restart.

Those banks you mentioned at the bottom of your post need to get the boot. Iceland is doing fine since they took that measure.

[TBF]

17. And we should have done that here as well. nt

[Cleita]

18. We still can look forward to something like that if Bernie

gets the Presidency. He has mentioned he would give Paul Krugman a cabinet position.

[TBF]

22. I really think he has a chance

[Cleita]

41. I do too. Unless there is a John Edwards type scandal, I think he's our next President and with

Bernie, I don't think there is anything in his past to discredit him or his present to shame him.

[muriel_volestrangler]

19. Iceland stopped the foreign depositors getting any money back - even the legal minimum

The Icesave dispute was a diplomatic dispute that began after the privately owned Icelandic bank Landsbanki went bankrupt on 7 October 2008, with a subsequent dispute evolving between Iceland on one hand and the United Kingdom and the Netherlands on the other. As Landsbanki was one of three systemically important financial institutions in Iceland to go bankrupt within a few days, the Icelandic Depositors' and Investors' Guarantee Fund (Tryggingarsjóður) had already been drained of capital reserves. This resulted in no funds to repay the legally required deposit guarantees to the foreign Landsbanki customers, who had lost all their savings in the Icesave branch of the bank. The Icelandic state refused to underwrite this liability on behalf of the guarantee fund. Originally this was because the state had lost funding access at credit markets due to the Icelandic financial crisis, but later proposed bilateral loan guarantees for repayment were rejected by the Icelandic electorate.

The dispute was centered on the demand by the British and Dutch states that the Icelandic state should guarantee at least the repayment of the Icelandic minimum deposit guarantees (up to €20,887 per account holder), which would be equal to £2.35bn (€2.7bn) repaid to the UK and €1.3bn repaid to the Netherlands, routed partly/entirely through the liquidation of remaining positive assets by the Landsbanki receivership. When Landsbanki went bankrupt and was placed into receivership by the Icelandic Financial Supervisory Authority (FME), 343,306 retail depositors in the UK and Netherlands that held accounts in the "Icesave" branch of Landsbanki lost a total of €6.7bn of savings. Because no immediate repayment was expected by any Icelandic institutions/authorities, the Dutch and British states covered these account losses in full. This meant that their national deposit guarantee schemes covered repayment up to the maximum limit for the national deposit guarantees - and the states covered the rest.[1]

The Icesave dispute was centered on the fact that Iceland had passed a law on 6 October 2008 - the day before the Landsbanki bankruptcy - that guaranteed full coverage of lost deposits for domestic Icelandic customers in the event of any Icelandic bank's bankruptcy. At the same time, there was no guarantee for foreign customers of the same bank. With this law in hand, the Landsbanki receivership was obliged to split up the old Landsbanki on 9 October 2008, so that all domestic assets and liabilities were transferred and to be continued by a newly founded domestic version of the bank named Nýi Landsbanki - entirely owned by the Icelandic state. While the new bank was fully solvent, the remaining foreign branch of the bankrupt Landsbanki was left with ISK 1743 billion (€12.1bn) in assets to face up its ISK 3197 billion of liabilities (€22.2bn). The public controversy got more heated when the UK parliament on 8 October used its anti-terrorism legislation against Iceland, in order to attempt freezing all Icelandic bank assets in the UK, until the time where a mutual repayment agreement for the Icelandic minimum deposit guarantees had been enacted.[2]

The UK and Netherlands only required for the Icelandic state to guarantee repayment of the Icelandic minimum deposit guarantees (€4.0bn) to retail depositors, and did not require any repayment guarantee for the other €18.2bn creditor claims in the bankrupt Landsbanki. The Icelandic state was offered a £2.35bn (€2.7bn) repayment loan by UK and a €1.3bn repayment loan by the Netherlands, where the Landsbanki receivership should repay with all the funds they could from the liquidation of assets in 2009-2015, and where the Icelandic state starting from 2016, subsequently should overtake the liability for the remaining repayments (including accrued interests) to UK and Netherlands. The Icesave bill 1 was the first negotiated loan agreement, attempting to define the repayment terms for these two loans. It was passed by the Icelandic parliament and enacted by the president on 2 September 2009, but was not accepted by the governments of UK and Netherlands, due to a unilaterally attached term added by the Icelandic parliament which limited Iceland's repayment guarantee only to 2024, with automatic cancellation of any potential owing still existing beyond this year. Instead, UK and Netherlands then counter proposed a new version of the loan agreement, referred to as Icesave bill 2, where no time limit was included for the Icelandic state's repayment guarantee. This was at first accepted by the Icelandic parliament, but the Icelandic president refused to enact the law, and referred any approval decision to a referendum being held on 6 March 2010, where it was subsequently rejected.

https://en.wikipedia.org/wiki/Icesave_dispute

Many DUers (most who commented on it, I reckon) were in favour of what Iceland did.