You can deposite your money into:

1) Commercial Banks -  A Guide to Closing Your Account

2) Credit Unions - U.S. credit union regulator sues Wells Fargo over crisis-era trusts 12/23/14
The NCUA said it is bringing the case after five credit unions bought about $2.5 billion in residential mortgage-backed securities issued from trusts between 2004 and 2007.  Those underlying loans soured, as borrowers began to default on their mortgage payments and lost their homes to foreclosure. The losses on these investments, the NCUA said, eventually led those five credit unions to fail. Regulators said Wells Fargo, as trustee for those trusts, had obligations under the law to correct problems with the loans and to protect the credit unions' interests.

U.S. credit unions locked in cyber battle with their regulator
http://www.reuters.com/article/idUSKBN0M51WT20150309

You'll never look at "credit unions" the same way again.
http://www.bloomberg.com/news/articles/2015-10-02/the-federal-reserve-has-some-advice-for-your-love-life

• The strength of the match, both in the headline credit score and its details, is predictive of whether or not a couple is more likely to break up for observable reasons pertaining to finance and household spending; and
• Credit scores are indicative of trustworthiness in general, and couples with a mismatch in credit scores are more likely to see their relationships end for reasons not directly related to their use of credit.

3) PUBLIC BANK!
There is a Publicly Owned Bank in North Dakota a bank that has been owned and operated by the people of North Dakota since 1919.
1200 Memorial Highway in Bismarck, North Dakota
Bank of North Dakota (BND) offers basic checking and savings accounts and other retail banking services to North Dakota residents.
Other entities may also open accounts at the Bank; however, BND offers fewer retail services than other institutions, and it has only one office. These limit its competitiveness in consumer banking. Instead, BND has taken a role more akin to a central bank, and has many functions, such as check clearing, that might be expected from a branch office of the Federal Reserve. The bank does have an account with the Federal Reserve Bank, but deposits are not insured by the Federal Deposit Insurance Corporation, instead being guaranteed by the general fund of the state of North Dakota itself and the taxpayers of the state. BND also guarantees student loans (through its Student Loans of North Dakota division), business development loans, and state and municipal bonds.
The Bank of North Dakota is the only state-owned facility of its type in the United States other than the Puerto Rico Government Development Bank. According to the Federal Reserve Bank, seven Indian tribes currently wholly own or substantially control a bank. How the Nation’s Only State-Owned Bank Became the Envy of Wall Street

PUBLIC BANKING POWER

 

Public Banking Institute - BANKING IN THE PUBLIC'S INTEREST find a chapter in your state!

We're all told that you should be using Privately held Credit Unions over Commercial Banks because of the lower fees. What they don't tell you and what was uncovered during this research is that there is a State Backed Bank that has out performed Wall Street according to this article

 

WHY EVERY STATE NEEDS IT'S OWN PUBLIC BANK EXPLAINED

Shale Boom Helps North Dakota Bank Earn Returns Goldman Would Envy which is not available on the Wall Street Journal without a subscription but can still be read here
http://www.dariodeangelis.com/shale-boom-helps-north-dakota-bank-earn-returns-goldmanwould-envy-wsj/

Dr. Ellen Brown

 

 

Dr. Ellen Brown has written about how the author of the WSJ article didn't report the facts of why the North Dakota Public Bank out performs everyone. It was reported that  the BND’s remarkable performance was due to the Bakken oil boom. The Wall Street-owned media routinely write off the exceptional record of this lone publicly-owned bank, crediting it to the success of the private oil industry. But the boom did not make the fortunes of the bank. It would be more accurate to say that the bank made the boom.
http://ellenbrown.com/2014/11/19/wsj-reports-bank-of-north-dakota-outperforms-wall-street/#more-8958

The Real Reasons for Its Stellar Success

The answer is something the privately-owned major media have tried to sweep under the rug: the public banking model is simply more profitable and efficient than the private model. Profits, rather than being siphoned into offshore tax havens, are recycled back into the bank, the state and the community. The BND’s costs are extremely low: no exorbitantly-paid executives; no bonuses, fees, or commissions; only only one branch office; very low borrowing costs; and no FDIC premiums (the state rather than the FDIC guarantees its deposits).

These are all features that set publicly-owned banks apart from privately-owned banks. Beyond that, they are safer for depositors, allow public infrastructure costs to be cut in half, and provide a non-criminal alternative to a Wall Street cartel caught in a laundry list of frauds.

Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her 200+ blog articles are at EllenBrown.com.

 

Building an Ark: How to Protect Public Revenues from the Next Meltdown By Ellen Brown October 13, 2014

"ICH" - Concerns are growing that we are heading for another banking crisis, one that could be far worse than in 2008.  But this time, there will be no government bailouts. Instead, per the Dodd-Frank Act, bankrupt banks will be confiscating (or “bailing in”) their customers’ deposits. That includes local government deposits. The fact that public funds are secured with collateral may not protect them, as explained earlier here. Derivative claims now get paid first in a bank bankruptcy; and derivative losses could be huge, wiping out the collateral for other claims.

In a September 24th article titled “5 U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives, Michael Snyder warns:

Trading in derivatives is basically just a form of legalized gambling, and the “too big to fail” banks have transformed Wall Street into the largest casino in the history of the planet. When this derivatives bubble bursts (and as surely as I am writing this it will), the pain that it will cause the global economy will be greater than words can describe.

The too-big-to-fail banks have collectively grown 37% larger since 2008. Five banks now account for 42% of all US loans, and six banks control 67% of all banking assets. Besides their reckless derivatives gambling, these monster-sized banks have earned our distrust by being caught in a litany of frauds. In an article in Forbes titled “Big Banks and Derivatives: Why Another Financial Crisis Is Inevitable,” Steve Denning lists rigging municipal bond interest rates, LIBOR price-fixing, foreclosure abuses, money laundering, tax evasion, and misleading clients with worthless securities. Particularly harmful to local governments have been interest rate swaps misrepresented as protecting government agencies from higher rates.

Yet as Michael Snyder observes:

At this point our economic system is so completely dependent on these banks that there is no way that it can function without them. . . . We are steamrolling toward the greatest financial disaster in world history, and nobody is doing much of anything to stop it.

 

How to Start a Bank Overnight

 

 

Forming a state or municipal public bank need not be slow or expensive. An online bank could be run out of the Treasurer’s office and operational in a few months. And the bank could be turning a profit immediately – without spending the local government’s own revenues.

How? The way Wall Street does it with our public deposits and investments: by leveraging. We could reclaim those funds and put them to work for our local economies.

The bank could be capitalized with a bond issue (borrowing from the public), and this capital could be leveraged into a loan portfolio that is about eight times the capital base. The bond issue could be financed with 1/8th of the interest accruing from this portfolio. The remaining 7/8th could be pocketed as profit.

This profit could be earned immediately and without risk, by buying municipal bonds rather than issuing loans. That move could also help municipalities, by guaranteeing that their bond rates remain low in the face of threatened interest rate rises on the private market.

How to Start a Bank at Virtually No Cost or Risk

To demonstrate the safety and viability of the model, the bank can start small and build from there. For startup capital, a new bank needs anywhere from a few million to $20 million nationwide. (The amount varies from state to state.) To be cautious and conservative, however, let’s say $40 million.

Many cities have this money available in “rainy day” or reserve funds. Many others have substantial investments, often underperforming, that could be more responsibly invested as an equity position in a bank. In California, for example, a whopping $55 billion is languishing in the Treasurer’s Pooled Money Investment Account, earning a mere 0.23% interest.

Moving a portion of those funds into the state’s own bank would just be good portfolio management. State pension funds are another investment option.

If surplus funds are not available, capital can be raised with a bond issue. (That is how the Bank of North Dakota got its start in 1919.) Assume the interest due on these bonds is 3%. The local government’s cost of funds will be $1.2 million annually.

At a 10% capital requirement, $40 million is sufficient to capitalize $400 million in loans. But again assume the bank is started conservatively at a 20% capitalization, for a loan portfolio of $200 million.

To make those loans, the bank will need deposits. These can be acquired without advertising or other costs, by moving $200 million out of the local government’s existing deposit account at JPMorgan Chase or another Wall Street bank. (In North Dakota, all of the state’s revenues are deposited by law in its state-owned bank.) Assume the new bank pays 0.3% interest on these deposits, or $0.6 million annually as its cost of funds.

To satisfy the 10% reserve requirement for deposits (something different from the capital requirement), $20 million of this deposit pool would be held in reserve. The remaining $180 million are counted as “excess reserves,” which can be used to make an equivalent sum in loans or bond purchases.

Assume the excess reserves are used to buy local municipal bonds paying 3% annually. The return to the bank will be $5.4 million less $0.6 million in interest on the deposits, for a total of  $4.8 million annually.

To recoup the cost of the bond issue, $1.2 million can be paid from these profits as a dividend to the local government. The bank will then have a net profit of $3.6 million annually; and this profit will have accrued to the local government as the bank’s owner, without needing to advance any money from its own budget.

What if the state needs its deposits for its budget?

 

 

That is the beauty of being a bank rather than a revolving fund: banks do not actually lend their deposits, as the Bank of England recently acknowledged. Rather, they create deposits when they make loans. If the state or local government needs more cash for its operating expenses than the bank has kept in reserve, the bank can do what all banks do: it can borrow. And if it has grown to be a large bank, it can borrow quickly and cheaply – from other banks through the Fed funds market at 0.25%, or from the money market at 0.15%.

A smaller public bank might want to keep a larger cushion of deposits in reserve for liquidity purposes. If it keeps 30% in reserve, in the above example $140 million would be left to invest in bonds, generating $4.2 million annually in interest. Deducting $1.8 million as the cost of servicing deposits and capital, the bank would still generate $2.4 million in profit, while providing a safe place to park public revenues.

What of the bank’s operating costs? These can be kept quite low. The Bank of North Dakota operates without branches, tellers, ATMs, retail services, mega-salaries or mega-bonuses. All those saved costs fall to the bank’s bottom line.

Ballpark operating expenses for a small but growing public bank with a President, Chief Financial Officer, Chief Lending Officer, Chief Credit Risk Management Officer, Compliance Officer, and the systems required to support a banking function are estimated at under $1 million per year. A start-up focused on municipal bonds could be operated for even less. This expense could come out of the initial $40 million in capitalization, again without impairing the local government’s own operating budget.

Manifesting the Bank’s Full Potential

Once a charter has been obtained and sound banking practices have been demonstrated, the capital ratio can be dropped toward 10%. When the bank has built up a sufficient capital cushion, it can begin to work with community banks and other financial institutions for the broad range of commercial lending that creates jobs and prosperity and generates profits as non-tax revenue for the municipality, following the Bank of North Dakota model.

The public bank can also invest in infrastructure loans to the state or local government itself. Interest now composes about half of capital outlays for public projects. Since the local government will own the bank, it will get this interest back, cutting infrastructure costs in half.

These are just a few of the possibilities for a publicly-owned bank, which can provide security from risk while generating a far greater return on the local government’s money than it is getting now on its Wall Street deposit accounts. As we peer into the jaws of another economic meltdown, moving our public funds into our own banks is an investment we can hardly afford not to make.

 

Public banking
is banking for
Main Street,
not Wall Street

Create a Pittsburgh Public Bank By John E. Hemington Jr.
North Dakota’s has strengthened the state economy and government finances, explains an attorney
John E. Hemington Jr. had a varied career and retired as information technology director for The Watson Institute in Leet. He is chairman of the advisory board for the Pennsylvania Public Banking Project (jehemington@verizon.net).
May 25, 2014 12:00 AM
Pennsylvania Public Bank Project http://publicbankingpa.org/

Since the financial crisis in 2008, state, county and municipal governments across the nation, with the notable exception of North Dakota, have found it increasingly difficult to manage their budgetary responsibilities. Pittsburgh and surrounding communities are no exception. Some are struggling worse than others, yet all are finding it difficult to balance their budgets and provide necessary services and infrastructure upgrades. Tax revenues are down and taxes have been raised to the hilt in many parts of the country. Most of the cuts in personnel, purchasing, infrastructure maintenance and programs which can be made have been made. Stimulus grants from federal and state agencies which helped for a while are gone or shrinking. Many governmental bodies have tried privatization as a solution, selling off valuable community assets, but this generally hasn’t worked out as well as its proponents have claimed. Some, as in Detroit and Jefferson County, Alabama, have simply given up and filed for bankruptcy.

Privatization frequently trades a temporary revenue increase for a long-term decline in public services and increased costs of use. Privatized employees are generally paid lower wages and receive few if any benefits, placing an even greater burden on already overstretched local social services while driving less money into local economies.

So where will the money come from? The answer can be found in North Dakota.

What makes North Dakota so different?

One factor is the rapid development of shale oil and gas, as in Pennsylvania. But another is that North Dakota has a public bank — a bank that has been owned and operated by the people of North Dakota since 1919. Because of the Bank of North Dakota, the state weathered the crisis of 2008 far better than most. North Dakota has not had a single local bank failure in more than 20 years. Unemployment is half that of Pennsylvania.

How does it work?

 

 

All state taxes and fees must be deposited in the Bank of North Dakota, which also is open to deposits from communities, institutions and individuals. The bank makes loans — including loans at less-than-Wall-Street rates to public agencies — with the “profits” returned to the state for public purposes.

The Bank of North Dakota has for a decade returned at least $30 million per year of non-tax revenue back to the state, contributing to the state’s regular budget surpluses. This million. Not bad for a state with a population of 670,000 — just a little over half that of Allegheny County.

Since this has worked so well for North Dakota, why haven’t more governments followed this path to prosperity?

This question is now being raised in several counties and communities across Pennsylvania. Initiatives for public banks have or will be proposed in Philadelphia, Reading, Luzerne County and Pittsburgh, and more are popping up around the commonwealth and the nation as people learn just how effective these banks can be for local and county governments and their residents.

Public banks keep local money working locally by partnering with and not competing with local banks and economic development agencies. They make affordable, job-creating credit available for private or public/​private developments and municipal financing.

Public banks offer no retail banking services and do not steal the customers of local banks, as Wall Street banks do. They keep interest rates as low as possible on bond issues for municipalities and school districts. And, more importantly, the interest paid comes back to the community since the community owns the bank.

A well-run public bank, such as the Bank of North Dakota, can deliver a higher return on equity than most other investments a government or authority can make, and a much safer return to boot. And this return comes back to the community that owns it, not to some Wall Street hedge fund for gambling on derivatives or paying stratospheric salaries.

Public banking in Pittsburgh could help build a stronger community, upgrade crumbling infrastructure and shore up the economy, providing better-paying jobs and greater opportunities for the graduates of this region’s exceptional schools and universities.

The Pennsylvania Public Banking Project, a 501(c)(3) nonprofit organization, is now working across the commonwealth and here in Pittsburgh to demonstrate and eventually bring to fruition the benefits of public banking.

Public Banking Institute 

 

Public Banking Institute - BANKING IN THE PUBLIC'S INTEREST find a chapter in your state!

Dr. Ellen Brown has written about how the author of the WSJ article didn't report the facts of why the North Dakota  Public Bank out performs everyone. It was reported that  the BND’s remarkable performance was due to the Bakken oil boom. The Wall Street-owned media routinely write off the exceptional record of this lone publicly-owned bank, crediting it to the success of the private oil industry. But the boom did not make the fortunes of the bank. It would be more accurate to say that the bank made the boom.
http://ellenbrown.com/2014/11/19/wsj-reports-bank-of-north-dakota-outperforms-wall-street/#more-8958

The Real Reasons for Its Stellar Success

The answer is something the privately-owned major media have tried to sweep under the rug: the public banking model is simply more profitable and efficient than the private model. Profits, rather than being siphoned into offshore tax havens, are recycled back into the bank, the state and the community. The BND’s costs are extremely low: no exorbitantly-paid executives; no bonuses, fees, or commissions; only only one branch office; very low borrowing costs; and no FDIC premiums (the state rather than the FDIC guarantees its deposits).

These are all features that set publicly-owned banks apart from privately-owned banks. Beyond that, they are safer for depositors, allow public infrastructure costs to be cut in half, and provide a non-criminal alternative to a Wall Street cartel caught in a laundry list of frauds.

Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her 200+ blog articles are at EllenBrown.com.

Public banking
is banking for
Main Street,
not Wall Street

 

 

Create a Pittsburgh Public Bank By John E. Hemington Jr.
North Dakota’s has strengthened the state economy and government finances, explains an attorney
John E. Hemington Jr. had a varied career and retired as information technology director for The Watson Institute in Leet. He is chairman of the advisory board for the Pennsylvania Public Banking Project (jehemington@verizon.net).
May 25, 2014 12:00 AM
Pennsylvania Public Bank Project http://publicbankingpa.org/

Since the financial crisis in 2008, state, county and municipal governments across the nation, with the notable exception of North Dakota, have found it increasingly difficult to manage their budgetary responsibilities. Pittsburgh and surrounding communities are no exception. Some are struggling worse than others, yet all are finding it difficult to balance their budgets and provide necessary services and infrastructure upgrades. Tax revenues are down and taxes have been raised to the hilt in many parts of the country. Most of the cuts in personnel, purchasing, infrastructure maintenance and programs which can be made have been made. Stimulus grants from federal and state agencies which helped for a while are gone or shrinking. Many governmental bodies have tried privatization as a solution, selling off valuable community assets, but this generally hasn’t worked out as well as its proponents have claimed. Some, as in Detroit and Jefferson County, Alabama, have simply given up and filed for bankruptcy.

Privatization frequently trades a temporary revenue increase for a long-term decline in public services and increased costs of use. Privatized employees are generally paid lower wages and receive few if any benefits, placing an even greater burden on already overstretched local social services while driving less money into local economies.

So where will the money come from? The answer can be found in North Dakota.

What makes North Dakota so different?

One factor is the rapid development of shale oil and gas, as in Pennsylvania. But another is that North Dakota has a public bank — a bank that has been owned and operated by the people of North Dakota since 1919. Because of the Bank of North Dakota, the state weathered the crisis of 2008 far better than most. North Dakota has not had a single local bank failure in more than 20 years. Unemployment is half that of Pennsylvania.

How does it work?

How does it work? All state taxes and fees must be deposited in the Bank of North Dakota, which also is open to deposits from communities, institutions and individuals. The bank makes loans — including loans at less-than-Wall-Street rates to public agencies — with the “profits” returned to the state for public purposes.

The Bank of North Dakota has for a decade returned at least $30 million per year of non-tax revenue back to the state, contributing to the state’s regular budget surpluses. This million. Not bad for a state with a population of 670,000 — just a little over half that of Allegheny County.

Since this has worked so well for North Dakota, why haven’t more governments followed this path to prosperity?

This question is now being raised in several counties and communities across Pennsylvania. Initiatives for public banks have or will be proposed in Philadelphia, Reading, Luzerne County and Pittsburgh, and more are popping up around the commonwealth and the nation as people learn just how effective these banks can be for local and county governments and their residents.

Public banks keep local money working locally by partnering with and not competing with local banks and economic development agencies. They make affordable, job-creating credit available for private or public/​private developments and municipal financing.

Public banks offer no retail banking services and do not steal the customers of local banks, as Wall Street banks do. They keep interest rates as low as possible on bond issues for municipalities and school districts. And, more importantly, the interest paid comes back to the community since the community owns the bank.

A well-run public bank, such as the Bank of North Dakota, can deliver a higher return on equity than most other investments a government or authority can make, and a much safer return to boot. And this return comes back to the community that owns it, not to some Wall Street hedge fund for gambling on derivatives or paying stratospheric salaries.

Public banking in Pittsburgh could help build a stronger community, upgrade crumbling infrastructure and shore up the economy, providing better-paying jobs and greater opportunities for the graduates of this region’s exceptional schools and universities.

The Pennsylvania Public Banking Project, a 501(c)(3) nonprofit organization, is now working across the commonwealth and here in Pittsburgh to demonstrate and eventually bring to fruition the benefits of public banking.

BAIL IN CRISIS AHEAD

 

12/18/24 America’s Big Five Are Plunging the World Into Another Banking Crisis

Financial consultant Peter Koenig, former World Bank economist, based in Zurich:

I think there is what we would call an impending banking crisis. A new banking crisis is looming on the horizon, I believe. And then, of course, there are many layers to this banking crisis and many elements to it. And if I may, I would like to, perhaps, address three of them, which give clear signals that something is not correct and will not be sustainable over time.

The points that I would like to make are not necessarily listed in order of priority, because they are related, and make no mistake – the coming crisis, like the one in 2008, which is still lingering, is planned. And it is planned by the international banking and financial elite, which is led by Wall Street with the support of the Fed and of the European Central Bank.

And, of course, the purpose of that is to make the rich financial elite richer and actually rob the common people of their savings and of their social system. That has been the case before and it is certainly happening again. And that’s what is looming.

The first one of these elements I want to talk about is the derivative market. It is frightening. There currently is an estimated way over $700 trillion globally outstanding in derivatives. And some people say it is over a quadrillion. But I'm conservative, I think this is probably a good enough figure, because it doesn’t really matter at this point. Even the $700 trillion is about ten times the global GDP of 72.6 trillion – an estimate of 2014.

And you look at the five largest US banks, they alone, each of them has more than $40 trillion in derivatives exposure. If they decide tomorrow to call in the debt at once, or even in part, it would create the worldwide tsunami with, possibly, a result in the collapse of the Western monetary system.

Today about 6 US banks control two thirds of all banking assets. And that is considerably more than it was in 2008, when the figure for the same banks was just over 40%. So, this is a big risk – the derivatives. And, of course, there is no regulation which stops the bank from calling in their debt. So, it can happen any time. If they don’t do it, perhaps, for now it is the means of self-protection.

The second point is somehow related and is very similar, it is the current gold frenzy. For some strange reason, when the economy is sick, it is like a thermometer; people run to gold. You can tell when it is sick, then they run to gold, as if you could eat gold when the system collapses. That of course doesn’t happen. So, it is really not of much use other than symbolic.

This happens before every crisis and it happened before 2008, and it is now happening again. But now the banking deregulation is allowing every form of speculation in the interest of profit making. It happens to an extent that is really insane.

Which means that the whole system, so to say, the blood of the financial system all over the world is not supported by any material substance.

Peter Koenig: Absolutely! That’s correct! You know, since Nixon in 1971 abandoned the gold standard which all the Western moneys were tired to, meaning that every currency had a convertibility ratio, the currency could be converted into gold. And that standard was abandoned in 1971.

Then, automatically and de facto every Western currency became fiat money, which means it is free to be printed by the central banks according to their needs, and doesn't need to be backed by anything, not even by the national economy, as you see very clearly in the US where money printing goes on to cover every debt. Every war that is financed requires new money.

And in the US it is relatively easy, because so far most of the rest of the world has been buying the US debt, especially China. Altogether, probably about 50% of the US debt is abroad. So, money printing is relatively easy, as long as people don’t react to it. And they haven't reacted to it, simply because the US has a very-very strong military power and countries are just simply afraid not to accept the dollar anymore as the reserve currency.

But, as you probably know, that has already drastically changed in the last ten years or so. And nobody really talks about it. Ten years ago about 90% of the world reserves were held in any form of the US dollar-denominated papers. Today, that has diminished to only about 60%. And it is shrinking even further.

And so, therefore, gold is again highly in demand, especially in those countries that love their currencies and would like to keep their currencies stable. One of those countries is my country – Switzerland.

Switzerland launched a referendum, as you have probably heard, it somehow made the headlines around the world, which requested the Swiss Central Bank to buy gold, to cover the reserves to about 20%. I think 20% of the reserves should be in gold. That was what the referendum asked for. Currently it is about 7%.

That could have meant massive gold buying for the Central Bank, which would have affected the whole monetary system and, of course, the value of gold. And again, money is so far not backed by anything else, and gold alone – what would it do? – you can’t really do anything with gold, other than feed an illusion, I think.

But anyway, the referendum was defeated by three quarters of the people. And this is also very controversial. This happened because at the very end nobody thought it might pass. It grew in acceptance until about a month before the vote. It had almost 50% of “yes”-sayers of the sovereign. And then, the Central Bank and the Government, and, of course, the financial and industrial lobbies were massively campaigning against it and, eventually, it was defeated by three quarters of the people who voted.

Anyway, gold is really a problem of the much larger scale. What I said is really insane. The banks are now issuing paper gold. They probably always had, but in certain measures. But now these certificates of gold far exceed the available physical gold. So, there are certificates which sell future gold.

What is the point in that?

Peter Koenig: The point of that is that they are speculating with the gains they can make, when they sell the gold in the future for less or for more as they feel fit. For the banks it creates an asset, if they have gold. You know, it is not physically available.

But that is absolutely crazy, I mean, the whole approach. The whole structure goes virtual.

Peter Koenig: That is absolutely right, it is crazy. And I think they get away with it, because most people don’t understand it. They don’t understand what deregulation has done to their financial system, to our Western financial system. It is absolutely crazy if a bank can issue paper gold in one day of 80 tons, which is ten times more than the average or estimated daily production of gold. The yearly gold production is estimated at about 2400-2700 tons.

Which is a scheme at a global scale. It is really a scheme, isn’t it?

Peter Koenig: Yes, absolutely! And people are just quiet about it. In total, there are probably more than 100 thousand tons of paper gold outstanding. And how much money would be available? It is the same as with derivatives. If the banks would decide to call in their paper gold in physical gold, it would have to be shipped to their location.

Right now the world has, that is an estimate and it is probably an underestimate, officially about 180 thousand tons of gold. Out of that, about 20% is available in the central banks, so it cannot be easily moved. And another 5% are private holdings in commercial banks and institutions. So, that’s what you are talking about, that may be moved. The shippable gold is perhaps about 900 tons.

Imagine if all outstanding gold would be called in to be physically delivered – what that would mean to the banking system. A very similar disaster as it would happen with the derivatives, if they were to be called in.

So, these two components alone already mean a serious trouble. And they are kind of related, because those people who are afraid of the derivatives’ collapse, they say – oh, well let’s better buy gold. So, they buy gold which they don’t have and which doesn’t exist and think – somehow we will manage, because once you have a contract, the contract is legal. So, if a bank has to deliver the gold they don’t have, but are committed to, then what does it do? It collapses or it will be rescued.

How?

Peter Koenig: And now we are coming to the third element. And this is probably the worst of all, the biggest calamity of all – the so-called bail-ins versus the former bailouts, as you probably know what that means. In 2008 the too big to fail banks were bailed out by the public money, basically by your tax money.

This is no longer so. There is this so-called Dodd–Frank US Banking Act, which says that the future insolvent banks have to rescue themselves by bail-ins, which means literally to confiscate money from the depositors and shareholders. And that also goes pretty unnoticed. This is the law that was passed in the US and it has been recently also passed by the European Commission. So, there is almost no way out.

And it has been rubberstamped, and that is the interesting part. On the weekend of November 16th at the G20 Meeting in Brisbane they endorsed a proposal which has a fancy name, it is called Financial Stability Board's Adequacy of Loss-Absorbing Capacity of Global Systemically Important Banks in Resolution. I had to write it down to remember the title.

Nobody really understands what it means, but it basically means that there is a financial stability board (the European Commission has it) that can now decide which bank is insolvent and how it has to rescue itself. So, this completely changes the rules of banking as we know it.

And mind you, and this is another important fact, that the G20 has no international legal standing. They are self-nominated, self-designated group of countries or rather their leaders who have decided to rule the world. There is no UN resolution approving that G20 is a legal international entity, a decision making organization. Nothing at all!

The G20 can even decide to exclude a leader they don’t like, as the G8 did, as we remember. Let’s put that G8 is a concentrated form of the G20. When they recently decided that they didn’t like President Putin, they just excluded him. And it is now called the G7. Terrible!

So, that’s the freedom. They have absolutely no legal standing, yet they decide over the savings and the social systems that the people have worked for all their lives – how it should be managed and when it can be stolen. This illegal group of the so-called world leaders, all of them course follow the destructive neoliberal doctrine.

They have decided that the too big to fail banks (some people abbreviate them in the TBTF banks) should stay in business whatever comes, but no longer with the tax money, but with the savings of their clients which they simply can confiscate and convert from a debt into assets.

It has actually happened in Cyprus, if you remember in the 2012-2013 crisis. In March 2013, I believe, the infamous troika the IMF, the ECB and the European Commission decided to help Cyprus with the bailout, meaning that they would give them money which would bail them out. But eventually that money would have to be bailed in from their shareholders and depositors…

bail in RISKY BANKS

 

2/17/15 JPMorgan tops list of risky banks: government study
http://www.reuters.com/article/2015/02/17/us-banks-regulations-jpmorgan-idUSKBN0LL1YL20150217
The study's numerical score is a measure of a bank's risk as a ratio of the total risk contained by a worldwide group of banks. The scores are based on metrics such as size, interconnectedness, complexity and cross-border activities, OFR said. Study:bit.ly/1E5MBc8

In 2013, it spotted risks in asset management in a report mandated by the Financial Stability Oversight Council, a group of the heads of the main U.S. regulatory agencies. The asset management report triggered attacks by the industry, which fiercely opposed any move toward tougher rules.  The latest study looked at 33 U.S. banks with assets over $50 billion. At that size, such banks are deemed "systemically important" and are subject to tighter rules. The eight largest banks in the group need to meet even tougher standards.  But size was not the only determining factor in measuring the risk in these banks, the study said.  "Several of the largest banks scored high in systemic importance because they dominate specific businesses, such as payments and asset custody services," the study said. "Others scored high in complexity because of their trading and derivatives businesses."