How Congress Helps the TBTF Banks Steal Your Money with Impunity

rcwhalen's picture



Well I won't back down, no I won't back down

You could stand me up at the gates of hell

But I won't back down


Gonna stand my ground, won't be turned around

And I'll keep this world from draggin' me down

Gonna stand my ground and I won't back down


"Won't Back Down" 

Tom Petty



There is a very important article on Jesse's Cafe Americain blogspot, “Warren Pollock and Ann Barnhardt On the Increased Risk to Customers In the US Financial System,” that illustrates how the US bankruptcy laws now enable theft brazen theft of customer funds by the largest banks.  I have written about this issue in the past on ZH, but Pollock and Barnhart really do a nice job of presenting the issue.


My friend and mentor Walker Todd of AIER, who worked as a legal counsel at the Federal Reserve Banks of New York and Cleveland, states the situation succinctly:


“Basically, there is a new 7th Circuit opinion saying that there is no reason to impose a constructive trust on a lender's takings of customers' funds from client commodity firms that were used (inappropriately) to secure the firms' borrowings, as long as the lender can say that it did not know WITH  CERTAINTY that customers' funds were being repledged.  Negligence and misappropriation (vs. knowing criminal intent) are now a sufficient excuse for letting the lender keep the money and go to the head of the line for distributions in bankruptcies of the client commodity firms.  Spread the word.”


Walker goes on to say that this decision does rise to the level of “what were they thinking’ when the Powers That Be think that somehow this is saving or strengthening the financial system.  He refers to the now infamous 2005 bankruptcy reform legislation, where the banks made themselves senior to the very customers and savers they are supposed to protect.  Pollock summarizes the situation nicely in the article:


"The way I read it was that basically you no longer have property rights. If you have your money in any (US) financial institution, you now have no property rights because in a crisis situation a bankruptcy judge now has the right to say that all of this speculation (by the banks and brokers) takes precedence over your savings."


Another veteran attorney that I have quoted often in past articles about creditor rights comments thusly:


“This decision is just further incentive to steal.  And if you do it in Fl., state attorneys say they will not prosecute theft when conducted without the use of violence.  So, unless the broker threatens to injure customers that do not turnover money, in Fl., it's freedom to steal.”


I won't go over all of the fine post from Jesse's Cafe Americain, but here are a couple of basic recommendation to readers of ZH and investors generally about the custody of customer funds:


First, no customer should EVER use a broker-dealer as custodian, either for securities or cash.  The 2005 bankruptcy reform legislation and the Seventh Circuit decision make clear that customers of a broker dealer have no legal protection from the predatory behavior of the large banks that clear for these firms.

Second, no customer should maintain funds in a depository about the FDIC insured limit if that bank has a broker dealer subsidiary.  Based on my reading of the Seventh Circuit decision, it is entirely possible for a bank to place a broker dealer affiliate into bankruptcy and then raid the customer accounts to protect the bank.  Keep in mind that the Seventh Circuit is simply interpreting the law as changed by the lobbyists for the TBTF banks.  


Third, everyone in the financial markets needs to start pressing members of Congress to repeal the 2005 bankruptcy reform laws in its entirety.  The bankruptcy reform legislation passed during Bush II is one of the most hideous laws ever passed by the national congress.  And this travesty was supported and encouraged by the Fed and other regulators, proof again that the zombie banks are calling all of the shots in Washington.  


The liberal notion of “regulation” begun in the 1930s has become a bad joke.  This legal decision shows that the only way we can regain control of the US politically is to see the largest banks broken up.  Unfortunately, neither of the political candidates for the presidency is likely to do anything of the kind.  At the end of the day, the only alternative for people who will not live as slaves to the big banks may be to seek the peaceful overthrow of the government of the United States, at least as it currently exists today.  Shall we start the revolution now?  Or wait for the big banks to take everything that we have and more?

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watch2x's picture

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lieutenantjohnchard's picture

it seems obvious to me that it's us against the state bureaucracy. the way things are going the people aren't even needed for tax dollars anymore given that the hydra can print paper money, and people willingly accept it regardless the deficits, debt etc etc ....

maybe that's the point of the ammo purchases by dhs, ssa and the oceanographers: we're expendable and not even needed as tax slaves anymore. seems like the people are sleep walking in a kindofa pre - tale of two cities backdrop. in a way this latter seems almost hopeful anymore given the looting, theft and on-going criminal activity amongst the so-called elite, who are anything but in my book.

tradewithdave's picture

Whalen and Barnhardt sitting in a tree.... JUBILEE

Not buying it.

Hayek FA's picture

All your fiat is belong to us!

If you still have stuff in their system, might be a good time to exit stage left


JOYFUL's picture

Whenever yu see the word 'revolution' inserted into an article here, yu know that yu are dealing with an agent of the dissimulationist agenda - it's acutely ironic that Whalen, who I have seen accused of being some kind of 'rightist' on these pages, is now gathered into the consensus of the top banner proglodytes

...we are approaching a uniformity of message up there* - only dear ol Reggie remains as a rear guard rump of an actual trader[a guy with skin in the game], as oppposed to pontiificator...jongleur...carnie barker tasked with keeping the rubes safely within the long defined limits of response to the tyranny of kosher kapitalism - succumb to slavery, or revolt ... then hit the remote for another dose of same...

it's all the same, no matter who be the court jester spouting the jargonistic usual, it was the master{Baudrillard} who summed it up best -

It is the Left that secrets and desperately reproduces power, because it wants power, and therefore the Left believes in it and revives it precisely where the system puts an end to it. The system puts an end one by one to all its axioms, to all its institutions, and realizes one by one all the objectives of the historical and revolutionary Left that sees itself constrained to revive the wheels of capital in order to lay seige to them one day

The(pseudo)revolutionary left has become the conservator of the system, which has been breaking down for decades now, and left to itself, would fall apart of it's own...but the 'revolutionary' conservatives whose desire is always for power fear the absence of that same system they pretend to proclaim the sins of...and in fact, they prop it up, so as to lengthen the time in which they may feed off of the productive forces of society along with their sponsors, the kapitalist kleptocrats, who invest(cf. Wall St and the Bolshevik Revolution\A Sutton) in "revolutions" in order to reap the dividend of high yielding holocausts which are supported and sustained via their koncentration kontrol of all form of production -from armaments to medicines to foodstuffs - profits are endless - and power the only aphrodisiac left for the leftist loons of the phony pharoah and congressional\professional entourage!

Beware the siren call of the dissumulationist in it's many melodies o gentle reader! The system is kollapsing of it's own weight...and the only way to cheat the fate pronounced on thee is to heave anchor and leave the fallen lands for a new haven...Numenor is under the be the bones of they who failed to flee...the wickedness of the false prophets of kapital!

one more quote from Jean B...

Marxism is only the disenchanted horizon of capital — all that precedes or follows it is more radical than it is

*Kosher Kapiltalist approved "get the Banksters" phony narrative de jour

Daily Bail's picture

What about the fact that hundreds of millions of personal Congressional wealth is stored in accounts at broker-dealers.  It would seem Congress would have an impetus to act on this and save their own accounts.  Pelosi has at least $40 million, and she's nowhere near the top of the list.

We'll see in the next few weeks whether Schwab or Fidelity issue some sort of statement to calm their customers, or would that in fact, actually scare the shit out of their customers and get them to close accounts even faster.

This would be a potential Black Swan for the markets, if it ever got out to the masses that their accounts are not safe with Chuck Schwab.

i-dog's picture

How sad that none can see what you're saying, Joyful. Oh least 3 of us are prepared (thee, me and he).

For those who don't follow links (it's to a ZH post), here is a one sentence summary of the "new paradigm" in the dawn's early light:

"You will work at whatever they need done, just to have a loaf of bread for your family each day and nothing more, for the rest of your natural life."

JOYFUL's picture

Stay thy sadness, O nose what knows....

the glad tidings of our ultimate success in staving off the schemes of the satanic skool & their skofin sidekicks have already been delivered...

altho painfully few of our peeple will escape from the approaching nets of the nefarious nekromancers, even but that few will be enuff to start all over our ancestors have done many times before us,,,and if a few of dem few were steadied in their course of escape by our forlorn forewarnings, that be reward enuff for this lil surf monkey!

Take ship now peeples of the hated haplogroups...and live to luv & fight another day, in a better way than on ur knees before the unctous overlords of the Mordorians amongst us!

come long yu brave few, ready to leave the fallen lands...on a lil ol Joyride! /// \\\Earnshaw(Dub mix) ...and a quest for Andúril, Flame of the West and the greatness of our pastoral past. Leave the Wormtongues to their fate!

Isotope's picture


Eschew obfuscation.

That is all.

JOYFUL's picture

Always amusing to witness the efforts made to disguise the limits of ones' comprehension by implying a lack of clarity on the part of one's interlocutor ...takes me back to the last go round of the liliputians here but few weeks past: I see that the usual perps are warming up on deck here today...perhaps we shall revisit the last aborted hatchet job>!>? Suggest pming LOBLO...seems to have recovered from the lastest shellacking at last!

suggestion box: when a batter hits one so far over yur head as to make recovery impossible, it is both bad form & pointless to complain to the ump that the guy rounding the bases at yur expense "hid" the ball on yu~! Self improvement is the only solution which will suffice for said problem...

please now... off yu skate, and chew pon dat whilst working on yur syntactical stickhandlin instead of pointless manipulations of the vote counter! tha tha that's all folks!

Dead Canary's picture


Never use a big word when a diminutive one will do. FYI.

falak pema's picture

spinning the web of wheel within wheels to create an aura of the unreal; the style is fascinating, the substance alas is lost in verbiage. It takes talent to spin a good tale!

Also the theme remains conspiracy, of and by a false "master" race of eurasian origin; like we said of the Huns during past 19th & 20th century european Armageddon. 

Joyful and i-dog make a good team on this diversionary and spicy theme; albeit aided and abetted by the current Jerusalem apartheid resurgence as local ally of global empire in vital oil patch.  

Racial traits never checkmate the complex game of geopolitical manoeuvering; where the logic of power like that of money is odourless and devoid of recurrent ethnicity, as this can become impediment.

We are allies to those on the same page as us, often against our own blood brothers!

Just look back at the recurrent feudal disputes in all royal houses. One that destroyed the greatest medieval invasion known to mankind was that of the Mongol Horde! 

Berke (golden horde/muslim) vs Hulagu (Ilkhanate/nestorian christian)!

It destroyed Mongol threat to Europe! 

As history shows us blood lines are as corrupting as any other facet of human ambition and inevitable hubris! 

I do have a penchant for Nemesis, agent of the Gods to wreak vengeance on the Oligarchs! 

JOYFUL's picture

Clearly Ghordius* has goaded yu successfully into imitating Cervantes chief protaganist on a will-o-the wisp misadventure far from home...more's the pity - on yur own turf yu have become formidable, and I have no fear of stopping for a moment to offer my compliments from time to see yu reduced to hollow posturing of the kind that too often passes for profundity here is indeed a breakfast of hardtack after the banquet of bon mots which more become thee...

I pray for thy recovery...and perhaps a more steely resolve to still yur hand from reaching ever anon towards that monkish wormwood!

*no idea why the hallowed tradition of tipping spears in passing would bring him to tears(of envy & remorse!???) but such is the modern destroy all that discomfits one!

Ghordius's picture

Alas, the nemesis of the tangler: clear speech. Joyful, I can't compete with you or falak pema - you are both great wordsmiths. My horror is simple in this matter: bloodlines are sacred. Even those of people that are criminals and nefarious for the nth generation. Attack the bloodline-as-the-enemy and you put yourself in the ranks of the worst barbarians. Because every bloodline includes innocents, as well as every generation. The new testament includes the King that slaughtered the innocents, remember?

You might be a stranger to blood feuds and vendettas - sadly I am not.

The Khazarian connection is weak. The Rothschild connection is mostly a washed out remnant of the propaganda of the 19th century. And they are both used to explain things that would happen in a similar way with different actors. But all this is debatable.

But sowing hate upon a bloodline is the stepping stone to blood war of the kind engaged by the Bentivoglio family, rounding up on a religious truce-day their enemies' families in churches, slaughtering them and nailing their steaming hearts to the palace-fortress' doors as a kind warning. A time and place that reminds many "statists-in-the-eyes-of-some-ZH-posters" that when the state is weak, something else is very strong - at that time Houses.

JOYFUL's picture

yur modesty is overdone sire: lately yu have been burning up the pages here with the sacred flame of sagacity....but whatever is the root of yur fear of blood feuds, it is a product of yur continental which the storyline goes on about something or other to do with Aryans and racial supremacists, all the whiles masking a deliberate and long standing kampaign of brooding blood hatred on the part of those whom yu pretend to dismiss as inconsequential!

The truth will out, but as I have already stated, it is not yet the time....

in the meanwhiles, yu seem to have reduced our friend Falak to a burbling state of incoherency....might I suggest yu redirect yur efforts towards his rehabilitation>!>??

falak pema's picture

+1 And for the records I was not influenced by anyone but myself. Free will and logic. Nice jousting of wordy words. I agree. 

tip e. canoe's picture

haha +1 infinitely reflecting simulcrum of a hollow earth

“Fear both the heat and the cold of your heart, and try to have patience, if you can.” -j.r.r.t

and one mo j.b. : “Imagine the amazing good fortune of the generation that gets to see the end of the world. This is as marvelous as being there in the beginning.”

Seer's picture

Revolutions tend to be more than a change of the guard.  It's the System!

As far as Baudrillard's call that power is only sought by the Left, well, that's comical.  But, I suppose, all those who make a living off of talking really don't have the time to actually live reality.

When I see "Left" and or "Right" I know that it's loaded.  This is child's shit.  Graduate up to real wisdom...


apberusdisvet's picture

If you read the ruling closely, your checking account is at risk, but any money you have in Moneymarket funds is even more so; think about the counterparty of a MMFund.

JohnKozac's picture

"Corzine could not be reached for comment."


Whomever puts their money in one of these Wall Street funds deserves what they get.   Sometimes that happens...we actually get what we deserve if we don't heed The Warnings.

Daily Bail's picture

I put up a story on this a few days ago with analysis of the 7th circuit court decision.  Then I spoke with Whalen about it.  Just so people understand what he is saying here - your money isn't safe at Schwab, Etrade, TD Ameritrade, Scottrade and Fidelity, all of whom are broker-dealers.  Personally, I have accounts at a few of those places, and I'm not going to close them tomorrow, but I do recognize the risks.

Not like these guys are leveraged 20:1 but they can still get caught up in a mess other ways.  If you remember, Etrade almost bit the dust in 2008 because of sub-prime exposure.

Read the 2nd letter from Satan for the 7th circuit analysis in this link:

Analyzing The Sentinel Decision - What Does It Mean For Corzine
StychoKiller's picture

According to Ms. Barnhardt, you're either stoned or stupid if you STILL have open accts...

Occams Aftershave's picture

"First, no customer should EVER use a broker-dealer as custodian, either for securities or cash. "

I'm no apologist for banks, but unless I missed some news, it is small futures broker-dealers which have had client funds stolen, not general securities broker-dealers.

There are rating services for futures broker dealers and if a customer had cared to check, the ones that stole were already rated poorly.

Due diligence, my friends.

Imminent Crucible's picture

"the ones that stole were already rated poorly"

All the ones that stole haven't been in the news yet. They will be.

And remember that "ones that stole" doesn't include only the MFGs and the Sentinels, but the recipients (JPM, BONY, etc) of stolen goods.

Money 4 Nothing's picture

Glass–Steagall Act insured this wouldn't happen.

Where is it now?


banksterhater's picture

right! I'm in Fidelity and TD Ameritrade, both rated highly, TD Bank, Canada is very solvent and owns like 50% of TD.

All_Is_Well's picture

The courts have been corrupted!!!!!!

StychoKiller's picture

The Dirty Dozen, How Twelve Supreme Court Cases Radically Expanded Government and Eroded Freedom  ISBN: 978-1-935308-27-0

Have a nice nap, Van Winkle?

tony bonn's picture

"..The bankruptcy reform legislation passed during Bush II is one of the most hideous laws ever passed by the national congress..."

that was a mouth full but the most important point is that bush ii, a foul and vile murderer, was the most hideous president ever had by a nation......not only does the bankruptcy law need to be repealed, but so does the hideous nazi patriot act....

anyone who votes for either obama or romney is a fucking asshole murdering traitor....

williambanzai7's picture

Did someone say something about the government and bullets?

Enkidu's picture

" seek the peaceful overthrow of the government of the United States..."


Unfortunately, 'peaceful' won't hack it... no real revolution is peaceful.

SafelyGraze's picture

a billion hollowpoints of light

Offthebeach's picture

TSA needs to get Hugo Boss to do their uniform design.

Money 4 Nothing's picture

Sheep tranquilizers, you know like watching the primaries for Hope n Change for 1 year. Were getting more change no matter who get's the office or who stays.

WillyGroper's picture

I think they were bullet shaped demerol laced suppositories for the masses to sleep deep when TSHTF.

new game's picture

2 fer - line up two in a row(FMJ).

DeadFred's picture

You're forgeting they are buying hollow points.

sgorem's picture

 Thanks Chris. MY interpretation of all of this bullshit is that if these TBTF banks seize my money, (don't have any deposited), under any of these cicumstances, then I'll trot my ass downtown with my Glock 36 and make a withdrawl. Fuck the Government, Fuck the Banks, and Fuck the Horse they rode in on!

dcb's picture

If you don't beleive this please now see george washington's post abough us domestic agencies stocking ammo. Hello folks wake up, we are all slaves of the banks

disabledvet's picture

still doesn't solve T.S Geithner's poignant criticism that these banks are profoundly lacking in capital. sorry but "stealing doesn't generate returns" as GS's stock performance can attest to. The only way to get the equity price turned around is with good old fashioned a reasonable rate and relative to the risk. as much as i see failure everywhere with the money-centric types i fail to see the problem: this country is AWASH in lending opportunities...unlike any other place on earth right now i might add. the Fed's job is to get the banks to STOP lending to the Federal Government at low to zero return...the consequences for not doing so are beyond dire. stay long "the Central Bank known as the Bank of North Dakota." the Fed's need to get their act together. PRONTO.

Seer's picture

" The only way to get the equity price turned around is with good old fashioned a reasonable rate and relative to the risk."

If only, if only...

These aren't your grandfather's days anymore.

You use one very key word there: risk.

Perhaps risk is really MUCH higher than we had thought.  Perhaps it's to the point where only the banks, the govt and BIG corporations don't think that everyone else is a good risk?

When the System is predicated on growth, and "returns" are about growth, and "interest" is all about growth, and, well, if growth really ain't there anymore, what then?

What would a system that's truly dying due to isses beyond its control (if it HAS to have growth and it does not have ANY plans in place should there not be growth [all of the leadership positions are created with this believe in mind]) really look like?

Clearly, printing money ain't going to do anything good for the System.  And, I'm afraid, going the other way ain't going to do any good either for the System.  How things outside of the System will be affected is pretty much an unknown.  One thing is sure: that which cannot continue forever won't.

dick cheneys ghost's picture

Would love to hear you say this on are a well respected voice and the country needs to hear this!!

NorthenSoul's picture

Walker goes on to say that this decision does rise to the level of “what were they thinking’ when the Powers That Be think that somehow this is saving or strengthening the financial system.

They were thinking that if it favors the TBTF banks, mighty providers of campaign ca$h, it was all good. As for the customers, a.k.a. the rubes, we all know how much respect the powers that be have for the non-billionaires in this country.

George Washington's picture

Mr. Chris Whalen in 'da house ...

illyia's picture

So is Ann Barnhardt, GW. She may go off on the fundy track at times, but man is she a powerful voice - a really informed voice.

And, honest. We mustn't forget that honesty will be the only way law returns.

edit: Oh - yeah - and thank you Chris for the great article and refs.

New World Chaos's picture

She's great.  Been reading her ever since she went viral.  Folks, don't let the crazy scare you away.  Don't be offended when she says the Eeeeeevil Mooooosloids were fully and solely responsible for 9/11 and God's chosen terrorist state certainly had nothing to do with it 'cuz they're the bestest allies ever.  Consider it good entertainment interspersed with her epic rants about Marxists and stark, rock-solid warnings about why everything in the system will be stolen.   

She had some funny shit recently on  No, it's not a spoof post inspired by space brownies.  It's vintage Barnhardt:

There are two physical human bodies in heaven right now: Our Lord and His Mother. We don't know exactly how to explain this, but I suspect that it has something to do with temporal or dimensional phase shifting, as Our Lord walked through walls, doors and other solid objects after the Resurrection (John 20:19). As Einstein discovered, mass and energy are equivalent, and thus can phase back and forth. We also know from the Mass itself that while we experience time in a linear continuum, God is in no way constrained by linear time, and can manipulate, bend and intersect points in time. How? Oh, no clue. There is so much about physics that we don't understand. But hey, that's all part of the fun of the mystery, right?

Maybe for Christmas I will get to watch Ann Barnhardt's head explode when she realizes our government is thoroughly infested with Luciferian Zionist traitors who did 9/11 and controlled the entire message and policy afterwards.  I still wonder what they did with the 99 Pentagon and Shanksville passengers they disappeared.  They probably performed unimaginable psychological experiments on them, then sacrificed them.

A Nanny Moose's picture

While I appreciate and respect her value, some of her fundy religion, and patriotism stuff is a little creepy to me.... (watch all 3)

Sometimes funny as shit. I am surprised this is still on the Yewtewbz

A Nanny Moose's picture

Yeah..junk the fuck away you fuckers. The limitations are in your own minds.