How Private Banks Move Derivative Risk Onto The Government
Executive Summary
- Private banks specialize in privatizing profits while placing their losses onto the government or the public.
Introduction
Private banks excel at putting their risks onto the public. This is explained in the following quotation.
“Bank of America Corporation moved its trillions in derivatives (mostly credit default swaps) from its Merrill Lynch unit to its banking subsidiary in 2011. It did not get regulatory approval but just acted at the request of frightened counterparties, following a downgrade by Moody’s. The FDIC opposed the move, reportedly protesting that the FDIC would be subjected to the risk of becoming insolvent if BofA were to file for bankruptcy. But the Federal Reserve favored the move, in order to give relief to the bank holding company. (Proof positive, says former regulator Bill Black, that the Fed is working for the banks and not for us. “Any competent regulator would have said: ‘No, Hell NO!’”) The reason this risky move would subject the FDIC to insolvency, as explained in my earlier article here, is that under the Bankruptcy Reform Act of 2005, derivatives counter-parties are given preference over all other creditors and customers of the bankrupt financial institution, including FDIC insured depositors. BofA is not the only bank threatening to wipe out the federal deposit insurance funds that most countries have. According to Willem Buiter, chief economist at Citigroup, most EU banks are zombies.” – The Bail Out is Out, the Bail in is In: Time for Some Publicly Owned Banks / Ellen Brown
Source: Ellen Brown
“Worse yet are these payday loans resorted to by the unbanked and underbanked, which average 400% interest annually or more.” – Banking on the People
Source: Banking on the People
https://www.amazon.com/Banking-People-Democratizing-Money-Digital-ebook/dp/B07R3F6ZX7/