Saturday, March 30, 2013

FDIC and BOE paper: One Controlling Entity for U.S./U.K. Financials. Plan for continuity of banks/money from "top down" and taking depositors money




This is one of those government papers from the FDIC website, where you read it and are able to see what they have planned.

The FDIC and the Bank of England put the plan together.  It is basically a One (New) World Order for financials and banking.  It even says the saving would be from the 'Top Down' in the paper.


This paper focuses on the application of “top-down” resolution strategies that involve a single resolution authority applying its powers to the top of a financial group, that is, at the parent company level. The paper discusses how such a top-down strategy could be implemented for a U.S. or a U.K. financial group in a cross-border context. 
This paper was finished in December of 2012.   This next paragraph proves they have been putting the plans in place to do 'bail ins' (steal depositor money) in the banks for awhile now.


The introduction of a statutory bail-in resolution tool (the power to write down or
convert into equity the liabilities of a failing firm) under the RRD is critical to implementing a whole group resolution of U.K. firms in a way that reduces the risks to financial stability. A bail-in tool would enable the U.K. authorities to recapitalize an institution by allocating losses to its shareholders and unsecured creditors, thereby avoiding the need to split or transfer operating entities. The provisions in the RRD that enable the resolution authority to impose a temporary stay on the exercise of termination rights by counterparties in the event of a firm’s entry into resolution (in other words, preventing counterparties from terminating their contractual arrangements with a firm solely as a result of the firm’s entry into resolution) will be needed to ensure the bail-in is executed in an orderly manner.

Here is another sentence about the depositors bearing the burden of the bank.

 requires that the losses of any financial company placed into receivership will not be borne by taxpayers, but by common and preferred stockholders, debt holders, and other unsecured creditors.

Read this next sentence and laugh.  They have the nerve to put the words " minimizes moral hazard" in, when they are stealing people's money.  They don't even know what the word "moral" means.  They have none.

Once appointed receiver for a failed financial company, the FDIC would be
required to carry out a resolution of the company in a manner that mitigates risk to financial stability and minimizes moral hazard. Any costs borne by the U.S. authorities in resolving the institution not paid from proceeds of the resolution will be recovered from the industry.

Number 30 specifically talks about U.K. stealing people's money:

 The U.K.’s planned approach to single point of entry also involves a top-down 
resolution. On the basis that the RRD will introduce a broad bail-in power, the U.K.
authorities would seek to recapitalize the financial group through the imposition of losses on
shareholders and, as appropriate, creditors of the firm via the exercise of a statutory bail-in
power. This U.K. group resolution approach need not employ a bridge bank and
administration, although such powers are available in the U.K. and may be appropriate under
certain circumstances.


Here is their 'top down' strategy again:


A top-down resolution by definition focuses on assigning losses and establishing new capital structures at the top of the group. This approach keeps the rest of the group, potentially comprised of hundreds or thousands of legal entities, intact


Then read this little paragraph.  Them working on having their One World Bank authority and overcoming individual country laws/governing bodies:


A key part of the work undertaken by the U.S. and the U.K. has been to identify the regulatory obligations of foreign authorities in response to a resolution originated by a home authority. Where any impediments to effective whole group resolution have been identified, authorities are in the process of exploring methods to overcome them.


Read the whole paper!  You will find it basically says One World Government in many ways and it will put the future financial problems on the depositors of the banks.  It also will worry about the Top Down.  In other words "screw the people" we need to be sure we are protected!

This is outrageous and people need to see this is from their government!  

If people won't believe and wake up, when they are reading a government paper about how the banks will take their money and putting all the pieces in place to do so.  They even say it is with a One Authority!  



4 comments:

  1. "A key part of the work undertaken by the U.S. and the U.K. has been to identify the regulatory obligations of foreign authorities in response to a resolution originated by a home authority."
    So if I were a major foreign authority, like for instance, Brazil, Russia, India, China etc. I would be very worried about having the IMF, World Bank and BIS as my settlement agent for all my trade. At any time, they could hold or use any of my funds, to pay "regulatory obligations".
    So what I would do is set up an alternative settlement mechanism, and call it something like "Development" bank.
    "But the gang of five, holding a summit on African soil for the first time, disappointed some by admitting that they have not yet resolved differences over how much seed capital the bank will start with or where it will be headquartered. Various technical details also remain to be agreed."
    Of course, you can't just send a message to TPTB saying "F**& off, rude letter follows." so you call it "Seed money" and estimate you will start with $4.5trillion.
    The Russians have learnt from that great American Icon, "There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again."

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  2. " They don't even know what the word "moral" means. "

    And you Sherrie, don't even know what the term "moral hazard" means. It's got nothing to do with morality. Moral hazard is when someone takes a bigger risk than usual because they won't have to live with the consequences. In other words, they don't fear making risky investments because they know they'll be bailed out.

    The plan you write about here is intended to reduce moral hazard by NOT simply bailing them out, but that costs "will be recovered from the industry."

    Pretty much the opposite of what you said.

    Sherrie, the concept of moral hazard is pretty much ECON 101 stuff. If you don't know the basics, how can we trust you on...well, anything?

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    Replies
    1. Really? Moral hazard is when the risk is not upon those taking it, but will be borne by others. They want to minimize it. Excuse me... but if they are going to live the high life and spend money and gamble it, then expect others to pay... then they have NO morals!

      Here is the definition. OH... Econ 101? I would suggest you take that course and learn the meanings.

      http://en.wikipedia.org/wiki/Moral_hazard

      In economic theory, a moral hazard is a situation where a party will have a tendency to take risks because the costs that could incur will not be felt by the party taking the risk. In other words, it is a tendency to be more willing to take a risk, knowing that the potential costs or burdens of taking such risk will be borne, in whole or in part, by others. A moral hazard may occur where the actions of one party may change to the detriment of another after a financial transaction has taken place.

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    2. I agree with and am as outraged by all this as you are, Sherrie, but I think the intent of the "moral hazard" reference is to transfer its effect from the institutions to the depositors. I've seen 2 or 3 articles advocating these measures where the author essentially says the depositors are irresponsible for having their money in reckless banks. Basically, they are not depositors, they are shareholders who deserve to lose their money. The FDIC can't cover all the potential losses in these banks, so it is now arguing that by bailing out depositors (i.e., shareholders, investors) out the FDIC is removing the "moral hazard" from the depositors' decisions by allowing them to bank irresponsibly. Essentially, they are changing the long relationship between banks and depositors without warning the people about to be fleeced. This will produce a lot of anger in the public when it happens. Could this be the reason for the feds purchasing all those hollow point bullets?

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Thank you for commenting. I moderate the comments due to a mass amount of spam, even though there is a word verification needed. I also moderate them due to some very foul and violent comments at times. Thank you for understanding. I am not at the computer constantly so sometimes it takes a little longer for the comment to show up. I appreciate hearing from you and you adding your voice to the conversation. Sherrie