No Bank Deposits Will Be Spared from Confiscation...
By Matthias
Chang
Global Research, April 24, 2013
Future
Fastforward
PLEASE
SHOW THIS TO THE JESTER AND THE REST OF THE GUR-FOOLS...
Region:
Europe,
USA
Theme:
Global Economy
i challenge anyone to prove
me wrong that confiscation of bank deposits is legalized daylight robbery
Bank depositors in the UK
and USA may think that their bank deposits would not be confiscated as they are
insured and no government would dare embark on such a drastic action to bail
out insolvent banks.
Before I explain why
confiscation of bank deposits in the UK and US is a certainty and absolutely
legal, I need all readers of this article to do the following:
Ask your local police,
sheriffs, lawyers, judges the following questions:
1) If I place my money with
a lawyer as a stake-holder and he uses the money without my consent, has the
lawyer committed a crime?
2) If I store a bushel of
wheat or cotton in a warehouse and the owner of the warehouse sold my
wheat/cotton without my consent or authority, has the warehouse owner committed
a crime?
3) If I place monies with
my broker (stock or commodity) and the broker uses my monies for other purposes
and or contrary to my instructions, has the broker committed a crime?
I am confident that the
answer to the above questions is a Yes!
However, for the purposes
of this article, I would like to first highlight the situation of the deposit /
storage of wheat with a warehouse owner in relation to the deposit of money /
storage with a banker.
First, you will notice that
all wheat is the same i.e. the wheat in one bushel is no different from the
wheat in another bushel. Likewise with cotton, it is indistinguishable. The
deposit of a bushel of wheat with the warehouse owner in law constitutes a
bailment. Ownership of the bushel of wheat remains with you and there is no transfer
of ownership at all to the warehouse owner.
And as stated above, if the
owner sells the bushel of wheat without your consent or authority, he has
committed a crime as well as having committed a civil wrong (a tort) of
conversion – converting your property to his own use and he can be sued.
Let me use another analogy.
If a cashier in a supermarket removes $100 from the till on Friday to have a
frolic on Saturday, he has committed theft, even though he may replace the $100
on Monday without the knowledge of the owner / manager of the supermarket. The
$100 the cashier stole on Friday is also indistinguishable from the $100 he put
back in the till on Monday. In both situations – the wheat in the warehouse and
the $100 dollar bill in the till, which have been unlawfully misappropriated
would constitute a crime.
Keep this principle and
issue at the back of your mind.
Now we shall proceed with
the money that you have deposited with your banker.
I am sure that most of you
have little or no knowledge about banking, specifically fractional reserve
banking.
Since you were a little
kid, your parents have encouraged you to save some money to instil in you the
good habit of money management.
And when you grew up and
got married, you in turn instilled the same discipline in your children. Your
faith in the integrity of the bank is almost absolute. Your money in the bank
would earn an interest income.
And when you want your
money back, all you needed to do is to withdraw the money together with the
accumulated interest. Never for a moment did you think that you had transferred
ownership of your money to the bank. Your belief was grounded in like manner as
the owner of the bushel of wheat stored in the warehouse.
However, this belief is and
has always been a lie. You were led to believe this lie because of savvy
advertisements by the banks and government assurances that your money is safe
and is protected by deposit insurance.
But, the insurance does not
cover all the monies that you have deposited in the bank, but to a limited
amount e.g. $250,000 in the US by the Federal Deposit Insurance Corporation
(FDIC), Germany €100,000, UK £85,000 etc.
But, unlike the owner of
the bushel of wheat who has deposited the wheat with the warehouse owner, your
ownership of the monies that you have deposited with the bank is transferred to
the bank and all you have is the right to demand its repayment. And, if the
bank fails to repay your monies (e.g. $100), your only remedy is to sue the
bank and if the bank is insolvent you get nothing.
You may recover some of
your money if your deposit is covered by an insurance scheme as referred to
earlier but in a fixed amount. But, there is a catch here. Most insurance
schemes whether backed by the government or not do not have sufficient monies
to cover all the deposits in the banking system.
So, in the worst case
scenario – a systemic collapse, there is no way for you to get your money back.
In fact, and as illustrated
in the Cyprus banking fiasco, the authorities went to the extent of
confiscating your deposits to pay the banks' creditors. When that happened,
ordinary citizens and financial analysts cried out that such confiscation was
daylight robbery. But, is it?
Surprise, surprise!
It will come as a shock to
all of you to know that such daylight robbery is perfectly legal and this has
been so for hundreds of years.
Let me explain.
The reason is that unlike
the owner of the bushel of wheat whose ownership of the wheat WAS NEVER
TRANSFERRED to the warehouse owner when the same was deposited, the moment you
deposited your money with the bank, the ownership is transferred to the bank.
Your status is that of A
CREDITOR TO THE BANK and the BANK IS IN LAW A DEBTOR to you. You are deemed to
have "lent" your money to the bank for the bank to apply to its
banking business (even to gamble in the biggest casino in the world – the
global derivatives casino).
You have become a creditor,
AN UNSECURED CREDITOR. Therefore, by law, in the insolvency of a bank, you as
an unsecured creditor stand last in the queue of creditors to be paid out of
any funds and or assets which the bank has to pay its creditors. The secured
creditors are always first in line to be paid. It is only after secured
creditors have been paid and there are still some funds left (usually, not
much, more often zilch!) that unsecured creditors are paid and the sums
pro-rated among all the unsecured creditors.
This is the truth, the
whole truth and nothing but the truth.
The law has been in
existence for hundreds of years and was established in England by the House of
Lords in the case Foley v Hill in 1848.
When a customer deposits
money with his banker, the relationship that arises is one of creditor and
debtor, with the banker liable to repay the money deposited when demanded by
the customer. Once money has been paid to the banker, it belongs to the banker
and he is free to use the money for his own purpose.
I will now quote the
relevant portion of the judgment of the House of Lords handed down by Lord Cottenham, the Lord
Chancellor. He
stated thus:
"Money when paid into
a bank, ceases altogether to be the money of the principal… it is then the
money of the banker, who is bound to return an equivalent by paying a similar
sum to that deposited with him when he is asked for it.
The money paid into the
banker's, is money known by the principal to be placed there for the purpose of
being under the control of the banker; it is then the banker's money; he is
known to deal with it as his own; he makes what profit of it he can, which
profit he retains himself,…
The money placed in the
custody of the banker is, to all intent and purposes, the money of the banker,
to do with it as he pleases; he is guilty of no breach of trust in employing
it; he is not answerable TO THE PRINCIPAL IF HE PUTS IT INTO JEOPARDY, IF HE
ENGAGES IN A HAZARDOUS SPECULATION; he is not bound to keep it or deal with it
as the property of the principal, but he is of course answerable for the
amount, because he has contracted, having received that money, to repay to the
principal, when demanded, a sum equivalent to that paid into his hands."
(quoted in UK Law Essays, Relationship Between A Banker And Customer,That Of A
Creditor/Debtor,
emphasis added,)
Holding that the
relationship between a banker and his customer was one of debtor and creditor
and not one of trusteeship, Lord Brougham said:
"This trade of a
banker is to receive money, and use it as if it were his own, he becoming
debtor to the person who has lent or deposited with him the money to use as his
own, and for which money he is accountable as a debtor. I cannot at all
confound the situation of a banker with that of a trustee, and conclude that
the banker is a debtor with a fiduciary character."
In plain simple English –
bankers cannot be prosecuted for breach of trust, because it owes no fiduciary
duty to the depositor / customer, as he is deemed to be using his own money to
speculate etc. There is absolutely no criminal liability.
The trillion dollar
question is, Why has no one in the Justice Department or other government
agencies mentioned this legal principle?
The reason why no one dare
speak this legal truth is because there would be a run on the banks when all
the Joe Six-Packs wise up to the fact that their deposits with the bankers
CONSTITUTE IN LAW A LOAN TO THE BANK and the bank can do whatever it likes even
to indulge in hazardous speculation such as gambling in the global derivative
casino.
The Joe Six-Packs always
consider the bank the creditor even when he deposits money in the bank. No
depositor ever considers himself as the creditor!
Yes, Eric Holder, the US
Attorney-General is right when he said that bankers cannot be prosecuted for
the losses suffered by the bank. This is because a banker cannot be prosecuted
for losing his "own money" as stated by the House of Lords. This is
because when money is deposited with the bank, that money belongs to the
banker.
The reason that if a banker
is prosecuted it would collapse the entire banking system is a big lie.
The US Attorney-General
could not and would not state the legal principle because it would cause a run
on the banks when people discover that their monies are not safe with bankers
as they can in law use the monies deposited as their own even to speculate.
What is worrisome is that
your right to be repaid arises only when you demand payment.
Obviously, when you demand
payment, the bank must pay you. But, if you demand payment after the bank has
collapsed and is insolvent, it is too late. Your entitlement to be repaid is
that of a lonely unsecured creditor and only if there are funds left after
liquidation to be paid out to all the unsecured creditors and the remaining
funds to be pro-rated. You would be lucky to get ten cents on the dollar.
So, when the Bank of
England, the FED and the BIS issued the guidelines which became the template
for the Cyprus "bail-in" (which was endorsed by the G-20 Cannes
Summit in 2011), it was merely a circuitous way of stating the legal position
without arousing the wrath of the people, as they well knew that if the truth
was out, there would be a revolution and blood on the streets. It is therefore
not surprising that the global central bankers came out with this nonsensical
advisory:
"The objective of an
effective resolution regime is to make feasible the resolution of financial
institutions without severe systemic disruption and without exposing taxpayers
to losses, while protecting vital economic functions through mechanisms which
make it possible for shareholders and unsecured and uninsured creditors to
absorb losses in a manner that respects the hierarchy of claims in
liquidation."(quoted in FSB Consultative Document: Effective Resolution of
Systemically …)
This is the kind of complex
technical jargon used by bankers to confuse the people, especially depositors
and to cover up what I have stated in plain and simple English in the foregoing
paragraphs.
The key words of the BIS
guideline are:
"without severe
systemic disruptions" (i.e. bank runs),
"while protecting
vital economic functions" (i.e. protecting vested interests – bankers),
"unsecured
creditors" (i.e. your monies, you are the dummy),
"respects the
hierarchy of claims in liquidation" (i.e. you are last in the queue to be
paid, after all secured creditors have been paid).
This means all depositors
are losers!
I Please
read this article carefully and spread it far and wide.
You will be doing a favour to all your fellow co omen and
more importantly, your family and relatives.
IF YOU NEED SOME TIME TO MAKE A DECISION PUT YOUR
DOUGH IN A COMMUNITY CREDIT UNION, AS THEY ARE ON A DIFFERENT SYSTEM. DO
NOT PUT IT IN BANKS OR FEDERAL CREDIT UNIONS .... THEY ARE ON THE SAME SYSTEM.