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Greek Bank Runs Begin Again, Bankers Go On Alert

from X22Report:

Episode 1206a.

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2 comments to Greek Bank Runs Begin Again, Bankers Go On Alert

  • Ed_B

    “Greek Bank Runs Begin Again, Bankers Go On Alert”

    Of course. This is what happens when a big problem is not fixed but merely delayed until some time in the future. Eventually that times comes and then we are right back where we were before. Only at that point, a huge amount of additional debt has been piled on the backs of the people who already had way too much debt. More debt added to a system that already has too much debt is no more a solution than giving a drug addict more drugs as a “cure”. This is not a cure but only enables the inevitable death spiral.

  • JMiller

    In this video it is stated that student loans are the only loan that you can’t discharge in bankruptcy. This is not completely true. Student loans can be discharged due to undue hardship.

    http://www.studentloanborrowerassistance.org/bankruptcy/

    Also he said that the FDIC can’t do anything unless the banks become insolvent so instead of becoming insolvent the banks will take deposits to recapitalize the bank which is called a bail-in. He is not correct. In the U.S., the banks can’t do bail-ins. They do not have the authority. The FDIC has the authority to do bail-ins only if a systemically important bank becomes insolvent or illiquid. If a major bank fails, the FDIC has stated that they will create a bridge bank and transfer the assets of the failed bank, including the deposits, over to the newly created bridge bank. This will protect the assets of the bank as well as depositors, and will allow customers to continue to do business as usual. Stockholders, bondholders and if needed perhaps some of the uninsured deposits will be used in a bail-in to recapitalize the bridge bank. As far as the derivatives that the bank has, people like Ellen Brown say that if a major bank becomes insolvent that the derivative counterparties are allowed to take any collateral that was posted because of the bank now being in default. That is true however the FDIC will also transfer the derivative contracts to the bridge bank so that the derivative counterparties cannot close out the contracts early and take the collateral, like they normally would be allowed to do because of a bankruptcy, since the contracts are now in a solvent bank. Also bailouts are still on the table by the way.

    He also stated that the FDIC does not have enough to cover all of it should these banks fail. Not sure what he means by “all of it”. The FDIC insurance fund only covers deposit accounts up to $250,000. While the FDIC insurance fund is currently underfunded they do have a credit line with the Treasury that they can borrow from which should be more than enough. And just so for anyone’s info, if a major bank becomes insolvent, the FDIC insurance fund will not even be used because the assets of that failed bank, which includes the insured deposits, will transferred to the newly created and solvent bridge bank.

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