Home » U.S. News, World

Unmasking the Bankers behind the Cyprus Confiscation (Bail-In) Model

8 April 2013 2 Comments

Why nobody’s bank account is safe thanks to Basel III and “Socializing the Losses.”

First it was people with bank accounts in Cyprus whose deposits were confiscated, “bailed-in,” or given a “haircut,” without their knowledge to recapitalize the Bank of Cyprus after Laiki Bank went bankrupt and was allowed to fail. Next the U.S., U.K., and Canada were warned that their bank deposits could meet the same Cyprus -confiscation fate based on irrefutable documentation here. Now behind the smoke and mirrors of supposedly preserving the international financial and monetary system the truth emerges and all the pieces fall into place. Warning: every G-20 country—every major bank and financial institution in every nation could be next.

Why? Because of groups called the Basel Committee, and the Financial Stability Board (FSB), both housed within the mighty Bank for International Settlements (BIS), and Basel III, no one’s bank deposit is immune to the Cyprus confiscation model if more banks fail.

Did anyone really believe that some Eurozone ministers and the International Monetary Fund’s Christine Legarde came up with the terms like: “haircut,” “bail-in,” or “template” for future banking crises all by themselves? Did everyone really think that the broad-daylight theft of bank accounts in Cyprus could not happen to them?

Allow me to introduce you to the banking cartels behind the scenes that made the Cyprus confiscation, bail-in model possible. Did you know they consider it “socializing the losses?”

What is BIS?

Based in Basel, Switzerland, the Bank of International Settlements’ (BIS) purpose is to “serve the central banks in the pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks.” Established on May 17 1930, after World War I to deal with “reparation payments imposed on Germany by the Treaty of Versailles,” BIS is the world’s oldest international financial organization and “remains the principal centre for international central bank cooperation.”

According to their website, “BIS is a meeting place for the central banks,” with “more than 5,000 senior executives and officials from central banks and supervisory agencies” participating in their meetings every year.

The most important meetings are held every two months. They “are the regular meetings of Governors and senior officials of member central banks.” BIS’s economic, monetary, financial and legal research “supports its meetings and the activities of the Basel-based committees.”

BIS represents the interests of the banking cabal.

What is the Basel Committee?

The Basel Committee was established as a response to the failure and liquidation of Bankhaus Herstatt in Cologne. Herstatt was a small German bank that was heavily leveraged in foreign currencies. In 1974 when Herstatt failed it wreaked financial havoc from Singapore to New York, and cost banks about $620 million in losses. While Herstatt was not ‘too big to fail’ it was heavily leveraged in foreign exchanges. As American Banker reported: “Herstatt’s counterparties were expecting to receive dollars in exchange for Deutsche marks” they had already delivered; instead Herstatt’s clearing bank, Chase Manhattan, now a part of JPMorgan Chase & Co. wouldn’t fulfill the orders. “This triggered a chain of subsequent defaults.”

BIS is frequently referred to as “the club for the world’s central bankers,” as noted by the Brookings Institute, a think tank based in Washington DC. BIS provides “certain financial services to central banks and also serves as a vehicle to promote cooperation between them. In addition, it provides support services to the Basel Committee and several other multi-lateral bodies focused on the world’s financial systems. Prominent among these is the Financial Stability Board (FSB) which was charged … by the heads of government of the Group of Twenty (G-20) nations with the mission of promoting financial stability around the world. In that capacity, it has been a prominent advisor to the Basel Committee in its work on Basel III.”

Basel Committee members come from Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Committee’s Secretariat is located at the Bank for International Settlements in Basel, Switzerland, its namesake. Basel, like BIS represents the banking cabal, money-changers, and the elite worldwide, not you.


What is FSB?

According to their website the Financial Stability Board (FSB) was “established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies. It brings together national authorities responsible for financial stability in significant international financial centres, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts.” Others might call them pretend regulators.

Chaired by Mark Carney, Governor of the Bank of Canada, like the Basel Committee, FSB’s secretariat is located in Basel, Switzerland, and is “hosted by the Bank for International Settlements.” Carney, who previously worked for Goldman Sachs in London, Tokyo, New York, and Toronto, for 13 years, will become the next governor of the powerful Bank of England in June 2013.

Bail-in tool to recapitalize the banks brought to you by the Basel Committee and FSB

Following is from a July 2011 supervision consultative document from the Basel Committee called: Global systemically important banks: Assessment methodology and the additional loss absorbency requirement.

Section IV, B in the table of contents reads: “Bail-in debt and capital instructions that absorb losses at the point of non-viability.” There we learn bail-ins should only be used if the bank can sustain itself in the private market after the failure. In Cyprus, for instance the banksters decided to let Laiki Bank fail but used the bail-in tool—by confiscating/stealing depositor funds in Laiki Bank to save/recapitalize the Bank of Cyprus.

Page 2, Section 7 & 8 of the 26- page report tells us how the Basel Committee worked with FSB on these bail-in policies that received the blessing from the G-20 world leaders.

“7. This consultative document sets out the proposal from the Basel Committee on the assessment methodology for global systemic importance, the magnitude of additional loss absorbency that G-SIBs [global systemically important financial institutions] should have, and the arrangements by which they will be phased in. This delivers on a request by the Financial Stability Board (FSB) as set out in its document Reducing the moral hazard posed by systemically important financial institutions – FSB Recommendations and Time Lines, which was endorsed by G20 Leaders in November 2010 (bold mine).

8. The work of the Basel Committee forms part of a broader effort by the FSB to reduce the moral hazard of G-SIFIs [globally active, systemically important, financial institutions]. Additional proposals by the FSB on recovery and resolution and on bail-in within resolution address the second broad objective, which is to reduce the impact of failure of a G-SIB … These proposals have been developed in close coordination with the Basel Committee, and are being published by the FSB concurrently with this document for consultation (bold mine).” Sounds nice, right? Except when you realize that it is your money without your knowledge that will be used to “reduce the impact, the moral hazard,” of a failed financial institution.”

Also see FSB’s 43-page October 2011 report: Key Attributes of Effective Resolution Regimes for Financial Institutions for more bail-in information.

As you can see, it is the Basel Committee and the FSB where the bail-in policy at the expense of bank depositors was concocted. It’s a tool within a “menu of options” to save the banking cabal in the event of future financial institution failures by stealing your bank deposits to recapitalize themselves–all in the glorious, noble sounding name of saving the financial and monetary system they created. Cyprus is not a one-time, exclusive situation. As these reports document, these policies have been in the works for over three years.

Read Basel III.

Basel III is being implemented in U.S., U.K., Canada, and around the world

As I previously reported, a December 2012 report written by the Federal Deposit Insurance Corporation (FDIC) and the Bank of England called: Resolving Globally Active, Systemically Important, Financial Institutions,” confirms the Cyprus-confiscation model could happen to Americans and the British.

As it is written on page 3, Section 13: “An efficient path for returning the sound operations of the G-SIFI [globally active, systemically important, financial institutions] to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt (translation: your bank deposits) from the original creditors of the failed company into equity.

Earlier on p. ii, we learn: “Such a strategy would involve the bail-in (write-down or conversion) of creditors at the top of the group in order to restore the whole group to solvency.”

Of course, the unsecured debt (deposits) that are bailed-in/converted/exchanged becomes “equity” to recapitalize a failed bank. Unbeknownst to people with bank accounts, the word depositor has been redefined to now mean an investor or unsecured creditor—it sounds nicer than saying we might steal your money you gave us for safe keeping if we screw up.

Like, Cyprus, the U.S. and U.K., in Canada the Basel III language to confiscate is also called “bail-in.” It appears in Canada’s 2013
Budget
on page 155 on the PDF, (page 144-145 of the budget):

“The Government proposes to implement a “bail-in” regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.”

As Dan Miles, Director of Communications from Canada’s Finance Minter Jim Flaherty’s office explained in a statement to Brian Lilley of Sun News:

“Bail-in arrangements are NOT ‘bail-out’ arrangements∙
Under a ‘bail-out’ arrangements, taxpayers money has to be used to save a failing financial institution∙ Under a ‘bail-in’ arrangements, a failing financial institution has to tap into their own special reserves or assets (which they have been forced to put aside) to keep their operations going∙ This keeps the financial institution in tract, without risking taxpayer money. This is what Canada is doing, in line with recent international agreements (bold mine).

Flaherty’s office is being disingenuous, word playing and re-branding. “Special reserves” and “assets” make up liquidity. Liquidly comes from bank deposits. Even the Group of Governors and Heads of Supervision(GHOS), the oversight body of the Basel Committee, acknowledge that fact. As the GHOS confirmed in January, “deposits with central banks are the most – indeed, in some cases, the only – reliable form of liquidity.”

Despite Flaherty’s noble sounding response under the guise of protecting taxpayers, the truth is Canada also used taxpayer dollars to bail-out Canadian banks after the 2008 financial crisis. Now, like in Cyprus, Canadians know their deposits could be used to bail-in (recapitalize) the geniuses at the central banks in another financial crisis. If banks were banks and not casinos, there would be no need to force them to keep “assets.” Note to Flaherty’s office: depositors are also taxpayers. Therefore you would still be taking/grabbing/using OPM (other people’s money)—again to “save a failing financial institution.”

The International agreement Flaherty’s office was referring to is Basel III, crafted by the unelected Basel Committee and FSB within BIS. It is brought to everybody’s bank accounts compliments of the central bankers, the world leaders of the G-20 and elsewhere. Bail-ins and haircuts are among the tools, their bag of tricks, within its policy framework for the world. The Basel Committee also considers recapitalizing failed banks “socializing the losses.” Translation: when the bankers screw up—everybody else will lose. (See Basel III video at the end)



Who is the G-20?

The G-20 is a group of twenty finance ministers, central bank governors, and leaders from twenty major economies from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States and the European Union, represented by the President of the European Council and European Central Bank.

IMF’s Managing Director, Christine Lagarde (former Chicago lawyer), Jim Young Kim, the President of the World Bank, and the International Monetary and Financial Committee are among those who also participate. The purpose of the G-20 summits is to “cooperate and consult on the international financial systems.” In recent years G-20 Summits are met with violent protests. Aside from staged photo-ops and controlled press conferences, the meetings are held in secret. Now you know why, as they plot new ways to steal your money all in the glorious name of saving their international financial system.

Click here for to see the status of the implementation and adoption of Basel III (as of end September 2012) by country.

Click here to read a Report to G-20 Leaders on Basel III implementation.

Bottom line: BIS, FSB, and the Basel Committee represent the interests of the central banks, financial institutions, the banking cabal—not you. If banks fail, in order to save/recapitalize them, it will be YOUR money, not THEIR money which is grabbed.

We have been in this movie before. We know how it ends. When the bankers gamble with your money, and they are profitable, they keep the profits, give themselves multi-million dollar bonuses, and you, the lowly bank depositor, receive little or no interest for keeping your money (supposedly for safe keeping) in their banks.

If bankers’ reckless speculation and bets go bad, they take YOUR money. First they did it by taking taxpayer money to bailout their banks in 2008. Now, thanks to Basel III, in the event of future bank failures (caused by their gambling debts), under the guise of looking out for taxpayers (after they already took your taxpayer money in 2008-2009), they will take your money again from your bank deposits while you are sleeping to bail-in their banks. You know the game now. As long as banks are too-big-to-fail and banksters are too-big- to-jail (remember MF Global and Jon Corzine, former Goldman Sachs?), banks are not really banks but casinos, and your money is up for grabs.

Will your bank deposit be confiscated next? Who knows—only time will tell one way or the other. Can it happen to your bank account? Yes.

While some people may mock, scoff and sneer at this information, they would do well to remember the bank run that set off the financial crisis in September 2008. As Paul Kanjorski, former Pennsylvania U.S. Representative, said on CSPAN of that day, “$550 billion was being drawn out [of U.S. money markets] in a matter of an hour or two.” The United States was experiencing an “electronic run on the banks … it could have collapsed the entire economy of the United States and within twenty-four hours, the world economy …”

No one was arrested for trying to crash the world economy.

Watch: Basel III – An overview of the Basel III framework creepy video. Note at 5:05 mark: the term “socializing the losses.”

Update 2016: Bank of Canada Lawsuit

Watch: Video: Rocco Galati challenges Bank of Canada to offer interest-free loans

Support Investigative Journalism
Thank you for helping to support all the work and research.