As word spread through Cyprus about the proposed bailout, citizens began lining up at banks to withdraw their money, and many banks closed. Though they’ve rejected the latest version of the bailout, the Cypriot Parliament will debate the proposal with the particular aim of protecting smaller depositors from having to pay the tax. Meanwhile, a scheduled bank holiday was extended from Monday through Wednesday.
All of this has nevertheless led to speculation about whether a similar situation could befall Americans. If American banks were in trouble, could they impose a tax on depositors? More importantly, if everyone rushed to take their money out of the bank in order to avoid the tax, would banks and ATMs shut down, as many have in Cyprus?
According to the Federal Depository Insurance Corporation, your money is safe and you shouldn’t worry.
There is an identical deposit insurance system in Cyprus and, for that matter, in the rest of the Euro Zone with a €100,000 limit. They will not pay on this, nor will the FDIC if it happens here, because it is not a "loss", it is a tax.
The FDIC does not protect you from taxation just as the EU's deposit insurance doesn't.
The Cypriot deposit insurance claim is just a strong as our FDIC claims are!
You let this door be opened when you permitted Obamacare to be passed and then you have continued to sit back when California recently retroactively imposed a tax on business sales going back four years.
This is the same thing folks. Your money can and will be stolen in this fashion if the government decides to do it, and the FDIC will pay you exactly nothing. The only thing standing between your money and this sort of theft is an act of Congress which they could (and will, if they choose to) pass in the middle of the night, buried in the 2,213nd page of some unrelated bill.
Affiliates of U.S. Bancorp, including U.S. Bancorp Investments, Inc., may use this prospectus in connection with market-making offers and sales in the secondary market of all outstanding senior notes, subordinated notes, common stock, preferred stock, depositary shares, debt warrants, equity warrants, units and purchase contracts issued by U.S. Bancorp as referenced herein. These affiliates may act as principal or agent in those transactions. Secondary market sales made by them will be made at prices related to prevailing market prices at the time of sale.
The stock got hit for a bit when this showed up on the tape. What's interesting is that none of it is for the parent company; in the document itself is the following:
USE OF PROCEEDS
U.S. Bancorp will not receive any of the proceeds from the sale of the securities referenced in this prospectus. All secondary market offers and sales made pursuant to this prospectus and any pricing supplement, prospectus supplement and prospectus describing the terms of the specific series of securities being offered and sold will be for the accounts of the broker-dealer affiliates of U.S. Bancorp in connection with market-making transactions.
Nobody needs any capital for anything -- we're all making plenty of money to grow our business with.
You know, the ones that we were told weren't a problem (until they suddenly were in 2008) and which the banks evaded having actually forced onto exchanges and centrally marked to the market on a nightly basis, with cash (or equivalent) collateral posted against positions?
The problem didn't go away, wasn't taken down, and there are persistent rumblings that if certain entities over in Europe start to press their hand (and maybe even if they don't) there are a lot of folks who are hiding ugly surprises.
If this blows we the people deserve it for refusing to demand change and Congress along with the Administration deserve to be ejected en-masse.
Watch for the mewling to begin shortly.
Update: Several people have asked how far up the "pucker" scale this one ranks. If the whispers I'm hearing are accurate, it's roughly something like this:
This was thought by many to be a "dead letter" sort of thing -- putback lawsuits from monoline insurers and others alleging that the issuers lied about the content of loans they were asked to insure.
Assured asked for $93 million in loans to be bought back from the RMBS they insured and Rakoff awarded $89.2 million-Flagstar had already paid a measly few million in putbacks to Assured so that was discounted out of a $90.1mn award. Still to be decided is if the bank that got Assured to insure the toxic rmbs will also have pay their $5 million legal bill and the judge needs to pick an interest rate to be paid. The total damages Assured asked for was $116 million which added in fees and legal bills. In the Flagstar suit the monoline did not try a fraud claim; just a breach of contract claim so that might have helped get the suit through the legal hamster wheel faster.
Assured seems to have gone for the quicker (and more-certain) win; breach of contract is a fairly common claim to try and it's easier to prove than fraud.
The problem for the banks with this decision cannot be overstated. There are a whole ton of these suits pending against all the "big names", with one of the big fights being over the use of sampling .vs. loan-by-loan verification.
This isn't over folks, despite coming off the front page. Teri has been all over this and it was one of the big featured areas here on the Ticker as well a few years back when the suits were flying "fast and furious", but many people have shrugged and said "oh that will go nowhere; they're banks."
Bad guess folks; this part of the saga is not over by any stretch of the imagination.
Gee, who's been talking about uncollateralized lending and the inherent fraud that is created by such transactions in that they are effectively a naked short on the currency involved?
Swaps that will be allowed to remain outside clearinghouses when new rules take effect in 2013 will require traders to post $1.7 trillion to $10.2 trillion in margin, according to a report by an industry group.
The analysis from the International Swaps and Derivatives Association, using data sent in anonymously by banks, says the trillions of dollars in cash or securities will be needed in the form of so-called "initial margin." Margin is the collateral that traders need to put up to back their positions, and initial margin is money backing trades on day one, as opposed to variation margin posted over the life of a trade as it fluctuates in value.
This, my friends, is the amount of margin in the amount of actual hard funds that is supposed to be tied up in the form of collateral to back these bets but currently is not.
Oh, and if you're wondering how that compares against the actual amount of "un-cleared" swaps? That's "estimated" at $127 trillion, which means that the ISDA thinks it's perfectly reasonable for people to have somewhere between 12 and 75 times leverage in these things.
That's utter and complete crap but it is what passes for an alleged "cleanup" of this "market."
Bernie! Oh Bernie! Is that you Made-Off?
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
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