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Cyprus Looting & Socializing the Losses: The Global Bankers who redefined Theft into “Haircut”

11 April 2013 4 Comments

Once upon a time a haircut meant “the act or an instance of cutting the hair.” In recent years, unbeknownst to an unsuspecting, trusting public, the slang stock exchange expression of “haircut” has become an acceptable banking practice to collectively apply to your bank accounts, according to the central bankers, world leaders and shadowy bankers like the Bank for International Settlements (BIS) and the Basel Committee. Just ask people in Cyprus.

“Haircut” in stock exchange slang means: “a percentage of the value of an asset deducted to account for possible fall in its value before it can be liquidated?” Translation: we can take your money that’s in our banks before you can get it.

Now that we are all clued in to what the bankers have known and planned for years. Nobody’s bank deposits are immune from the Cyprus confiscation model “haircut” to recapitalize the bankers’ financial institutions by taking your money if the banks become insolvent, which is just a nicer word for bankrupt. As previously reported, in bankster-speak, it’s also called “socializing the losses.”

Welcome to the subculture of the money changers; where verbal shorthand, slang, represents convoluted concepts that become policy that may affect you. It’s time you understood their language.

From the Basel Committee on Banking Supervision report dated December 2010 (revised June 2011) called: Basel III: A global regulatory framework for more resilient banks and banking systems.

In the introduction on page 1 of the 69-page report (PDF) we learn: “The objective of the reforms is to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spillover from the financial sector to the real economy.”
Absorbing shocks is when a bank could fail and the bankers recapitalize it in order to save it. Financial and economic stress occurs when the banksters bets go bad. During the 2008 financial crisis, for instance, they recapitalized their banks under the auspices of saving the financial and monetary system by taking taxpayer money (your money) to bail them out.

On page 44, Section 108 we see how “haircuts” (taking depositor money) is part of their bag of tricks to use the next time a bank fails to recapitalize them:

“Require banks to use supervisory haircuts when transforming non-cash OTC [over-the-counter] collateral into cash-equivalent.

108. To implement the supervisory haircuts for non-cash OTC collateral, a new paragraph 61(i) would be incorporated in Annex 4 as follows:

61(i). For a bank to recognise in its EAD [Exposure at default] calculations for OTC [over-the-counter] derivatives the effect of collateral other than cash of the same currency as the exposure itself, if it is not able to model collateral jointly with the exposure then it must use either haircuts that meet the standards of the financial collateral comprehensive method with own haircut estimates or the standard supervisory haircuts.”

On page 46-47, Section 104, Part B, at ii:

“Changes in the value of collateral need to be reflected using the supervisory haircut method or the internal estimates method, but no collateral payments are assumed during the margin period of risk (bold mine).”

Who is in charge of the “supervisory haircut method?” Naturally, it is the bankers.

Read the entire report for more on haircuts.

Now let’s look at this 162-page report called: Principles for financial market infrastructures brought to you by the Bank for International Settlements, and another off shoot called the International Organization of Securities Commissions, dated April 2012.

On page 30, section 3.4.6. of the report, we are told: “Collateral or other equivalent financial resources can fluctuate in value, however, so the payment system should establish prudent haircuts to mitigate the resulting potential future exposure.”

From Page 46:

“Principles 5: Collateral

An FMI [financial market infrastructure] that requires collateral to manage its or its participants’ credit exposure should accept collateral with low credit, liquidity, and market risks. An FMI should also set and enforce appropriately conservative haircuts and concentration limits.

Key considerations

1. An FMI should generally limit the assets it (routinely) accepts as collateral to those with low credit, liquidity, and market risks.
2. An FMI should establish prudent valuation practices and develop haircuts that are regularly tested and take into account stressed market conditions.
3. In order to reduce the need for procyclical adjustments, an FMI should establish stable and conservative haircuts that are calibrated to include periods of stressed market conditions, to the extent practicable and prudent.
4. An FMI should avoid concentrated holdings of certain assets where this would significantly impair the ability to liquidate such assets quickly without significant adverse price effects.
5. An FMI that accepts cross-border collateral should mitigate the risks associated with its use and ensure that the collateral can be used in a timely manner.
6. An FMI should use a collateral management system that is well-designed and operationally flexible.”

In other words, financial institutions/banks should be able to move quickly to grab your cash if need be to save them. Remember how in Cyprus initially the haircut/theft was 9.9% for deposits over €100,000. That “haircut” percentage quickly soared to 60%? Does that sound conservative and prudent to you? Next time the “haircut” could be even higher. Whatever it takes to keep the bankers solvent.

When a person gambles at a casino they know they are gambling. They know they could lose their money. Now, people could lose their money by keeping it under the false pretense of keeping it safe in a bank. Banks used to be institutions that received, lent, exchanged and kept money for safekeeping but those days are gone. Now thanks to “haircuts” and “bail-ins” as being a part of the bankers bag of tricks to supposedly preserve the financial and monetary system (they created), banks are now casinos except you, the depositor, doesn’t get to play in the game. Just like casinos where the house always wins in the long run, so does the banks in the event of a failure at your expense.

Below is a partial list of banks complied from CNN and ehow money that received bailouts funded by taxpayers after the 2008 financial crisis. The U.S. taxpayer alone, to the tune of about $200 billion, bailed out hundreds of banks through its “Capital Purchase Program.” Imagine when the next financial crisis occurs (when not if) and banks receive a “haircut” or “bail-in” to stay afloat in the glorious name of preserving the financial and monetary system. Will you be next?

$1.4 to $25 Billion
The following financial institutions received more than $1 billion: Citigroup ($25 billion); J. P. Morgan Chase ($25 billion); Wells Fargo ($25 billion); Bank of America ($15 billion); Goldman Sachs ($10 billion); Merrill Lynch ($10 billion); Morgan Stanley ($10 billion); PNC ($7.7 billion); Bancorp ($6.6 billion); Capital One ($3.5 billion); Regions Financial ($3.5 billion); SunTrust ($3.5 billion); Fifth Third Bancorp ($3.4 billion); BB&T ($3.1 billion); Bank of New York Mellon ($3 billion); Keycorp ($2.5 billion); Comerica ($2.2 billion); State Street ($2.5 billion); Marshall and Ilsley Corporation ($1.7 billion); Northern Trust Corporation ($1.5 billion); Huntington Bancshares ($1.4 billion); and Zions Bancorporation ($1.4 billion).

$200 to $973 Million
The following banks received more than $200 million: Synovus ($973 million); First Horizon National ($866 million); M & T Bank ($600 million); Associated Banc-Corporation ($530 million); Webster Financial Corporation ($400 million); City National ($395 million); TCF Financial Corporation ($361 million); South Financial Group ($347 million); Valley National Bancorp ($330 million); East West Bancorp ($316 million); Citizens Republic Bancorp ($300 million); Susquehanna Bancshares ($300 million); UCBH Holdings ($298 million); Cathay General Bancorp ($258 million); First Merit Corporation ($248 million); International Bancshares Corporation ($216 million); Trustmark Corporation ($215 million); Umpqua Holdings ($214 million); and Washington Federal Savings ($200 million).

$105 to $193 Million
The following banks received from $105 to $193 million: MB Financial ($193 million); First Midwest Bancorp ($193 million); Pacific Capital Bancorp ($188 million); First Niagara Financial Group ($186 million); United Community Bank ($180 million); Provident Bankshares ($151 million); Boston Private Financial Holdings ($150 million); Old National Bank ($150 million); Western Alliance Bancorporation ($140 million); CVB Financial ($130 million); Banner Corporation ($124 million); Signature Bank ($120 million); Iberiabank Corporation ($115 million); and Taylor Capital Group ($105 million).

$30 to $80 Million
The following banks received $30 to $80 million: Midwest Banc Holdings ($80 million); Sandy Spring Bancorp ($80 million); First Financial Bancorp ($80 million); Columbia Banking System ($76.9 million); Wesbanco and Southwest Bancorp ($70 million); Superior Bancorp ($69 million); Nara Bancorp ($67 million); Wilshire Bancorp ($69 million); Great Southern Bancorp ($60 million); Ameris Bancorp and Home Bancshares ($50 million); Capital Bank ($42.9 million); Southern Community Financial ($42.75 million); Heritage Commerce ($40 million); Simmons First National ($40 million); Cascade Financial ($39 million); Peoples Bancorp ($39 million); Porter Bancorp ($39 million); Eagle Bancorp ($38.2 million); Encore Bancshares ($34 million); Bancorp Rhode Island ($30 million); and Severn Bancorp ($30 million).

$25 Million or Less
The following banks received $1 to $25 million: Peapack-Gladstone Financial ($28.7 million); Intermountain Community ($27 million); Intermountain Community Bancorp ($27 million); LNB Bancorp ($25.2 million); HF Financial Corporation ($25 million); Heritage Financial Corporation ($24 million); Wainwright Bank and Trust ($22 million); Indiana Community Bancorp ($21.5 million); First Pacific Trust Bancorp ($19.3 million); HopFed Bancorp Incorporated ($18.4 million); Bank of Commerce Holdings ($17 million); First Financial Services ($16.3 million); Community West Bancshares ($15.6 million); Broadway Financial Group ($9 million); FFW Corporation ($7.3 million); Capital Pacific Bancorp ($4 million); and Saigon National Bank ($1.2 million).

Update 2016: Bank of Canada Lawsuit

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