Bernanke Fails to Answer Concerns about a Cyprus-Style Seizure of American Bank Deposits

George Washington's picture

The government of Cyprus wants to grab bank deposits, and the chief economist of the German Commerzbank has called for private savings accounts in Italy to be similarly plundered, and other nations may be moving in that direction as well.

The American government has seized private assets before, and President Obama authorized seizure of property again last year. (The Argentinian government grabbed 401k assets; and some in the American government have mulled the same thing. And the  U.S. government’s take-down of Megaupload was also an exercise of the power to seize all of the legal property held in a storage facility because a handful of crooks have illegal property in theirs.  )

Zero Hedge has been warning for years that Western governments – including the U.S. – would eventually seize bank assets.

Bernanke was asked yesterday whether a Cyprus-style grab of bank deposits is possible in the U.S. :

Question: I was wondering if you can tell me how if a run on the banks happens in Cyprus, how that might affect U.S. markets. And also is it possible for the U.S. to levy a tax on regular deposits here? Or why not?


Bernanke: As someone mentioned Cyprus is a tiny economy. I don’t think these issues as worrisome as they are and as concerned as we would be for the Cyprus people, I don’t think that they have a direct implications for the U.S. economy.


The only way that they would create a problem would be if the runs became contagious in some sense, if depositors in other countries lost confidence. But to this point I’m not aware of any evidence that that is in fact the case.


The argument the Europeans are making is that Cyprus is a unique situation, very different situation, and indeed, it is quite unusual to have a banking sector as large as they have relative to their economy.


In terms of the United States, the FDIC was founded in 1934, and we have insured deposits and they are very proud of the fact that no one has ever lost a dime in insured deposits.


And during the crisis the response of the government was in fact to increase the level of deposit or account sizes that were insured. So I consider that to be extremely unlikely in the United States.

Bernanke’s response is unsatisfactory for 2 reasons.

Initially, the FDIC only insures deposits up to $250,000. So deposits over that amount are unprotected.

Indeed, the FDIC has, in fact, come very close to being insolvent at various times.  See the following articles from the New York Times, American Banker, Bloomberg, Zero Hedge and Mish.

True, the Treasury Department would likely just bail out the FDIC if the FDIC really went belly up. But that would take a political act of will.  And so Bernanke should have said, “we will always make sure the FDIC has enough money”.

Second – and more important -  Bernanke failed to answer the question altogether.   The question was not about whether the government would save bank depositors from economic conditions caused by others.  The question was whether the government itself would grab deposits.

People didn’t think any European country would seize bank deposit assets.  But the EU demanded that the government of Cyprus seize private bank deposits.  The attempt of a government to seize  private property is undermining confidence in Europe … and many people worry that that contagion will spread.  That is what the question was about.

Bernanke entirely failed to answer the question which was actually asked … and has thereby caused a tsunami of distrust on the Internet.

In the same way that the Department of Justice’s wishy-washy assurances that it probably wouldn’t assassinate Americans on U.S. soil hasn’t reassured anyone, Bernanke shouldn’t have given a half-hearted reply.  He should have said:

The U.S. will never, ever seize any American’s bank deposits under any scenario whatsoever … without exception. We respect the rule of law as the basis for our economy, and we will never do anything which interferes with private property rights.

Bernanke’s failure to reassure couldn’t have come at a worse time.

British MP Nigel Farage just gave the following advice in response to the Cyprus bank deposit grab:

Get your money out while you still can.

The failure of American economic “leaders” to provide real reassurance regarding our bank deposits will just increase mistrust.

Indeed, more and more Americans realize that the government has bailed out the super-elite of the big banks,  and enabled their fraud … while  hosing the little guy again and again (and again). People see that we have socialism for the rich, but cut-throat, sink-or-swim capitalism for everyone else.   They see that we have a malignant synergism between D.C. politicians and giant companies. Look here, here, here.

Indeed, after Wall Street giants such as MF Global and JP Morgan got caught seizing segregated client funds – but were never prosecuted by the government – both amateur and sophisticated investors have lost trust in the American financial system and financial regulators.   (It has become obvious to all that the government is trying to cover up for the stunning crimes of the big banks.)

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AnAnonymous's picture

Ah, typical.

How 'americans' enable each other


Ben Bernanke, prodigious servant to the 'american' middle class, man of authority

the free press

an 'american' propagandist

How does it work?

Free press asks a question they know Ben Bernanke is not qualified to answer for ('american' division of powers), the question being essential.

Ben knows his part, he knows he cant answer to it without abusing his autority (division of powers, 'americanism') so he plays the mute part. He will be rewarded later for taking the blame and diverting from the point.

'American' propagandist throws mud on Bernanke, claiming that Bernanke failed to answer a critical question without mentioning that Bernanke has no authority to answer to that question and that he simply complies to the 'american' demand not to encroach on a turf not his own.

A dog and pony show, 'american' style or how 'americans' enable each other.

What's up? Easy as usual. The free press by asking the question to a man known not to have the authority to answer it shall have been the target of the blame. But, hey, if performed, the dog and pony show cant be played. And the 'american' propagandist has no reason to be.

So let's play the play the 'american' way, will ya.

TheFourthStooge-ing's picture

Chinese citizenism citizen propagandist drops trou and 'throws mud' on the roadside, end result of a wok and puppy show, 'AnAnonymous' style.

Propaganda is getting cheaper and cheaper by the day. Propagandists are really out of ideas to provide something that could hold for more than one minute.

larz's picture

silence is deafening

creeko's picture

" and has thereby caused a tsunami of distrust on the Internet."

Hahaha... no, really?  There's distrust on the internets?


InconvenientCounterParty's picture

As long as the Fed/Treasury/Banking complex can literally print money there is no need to seize deposits.

When they finally break the "printing press", inflation will crush the real value of deposits and I doubt that all the dollar denominated deposits in the US would be enough to save their house of cards.

It seems to me that the value lies in various deceptions not a full fronal assault on confidence.

HardAssets's picture

You can save many precious minutes in your life - by not wasting them listening to anything the Bernank says.

DOT's picture

Watching or listening to Benny leads to alcoholism. Taking LSD would be a better approach.

moneybots's picture

"He should have said:

The U.S. will never, ever seize any American’s bank deposits under any scenario whatsoever … without exception."

That would have meant he would have been lying.  As Junker said, WHEN IT IS SERIOUS, YOU HAVE TO LIE.

Any assurance from Bernanke or any government official is worthless.

fijisailor's picture

Bullshit has worked so well for so long that the idea of honesty is totally foreign to these wankers.  Anyone with half a brain will take steps to cover their ass.

rsnoble's picture

Oh now come on that could never happen in the US. LMAO.

They've already destroyed my dads retirement plans.  Motherfuckers got what's coming to them.

Vendetta's picture

So .. do the crime lords in charge have steal the people's money BEFORE the fraud games being played constantly cleans out everyone's accounts due to bank collapse?

little buddy buys the dips's picture

the bernank always fails to answer questions. that's not what he's there for.


does anyone really think he gives a shit about answering questions?


his non-answer is the answer. read between lines. find answer.


buy moar silver.

marchare's picture

Larger slice of a smaller pie.

Son of Loki's picture

"Pooofffff...and it's gone !!!!!!!!!!!!!!!!!!!!!!!"

MickV's picture

Fiat money is based totally on CONFIDENCE. When there is no CONFIDENCE there is no money---- Deflation.

johnQpublic's picture

+1 for the idea, but you mean inflation.

loss of confidence would cause the dollars drop to ~0

1000 dollars might buy what 1 once did

DavosSherman's picture

Cyprus is larger than Lehman was. . .

WTFUD's picture

First of all i thought put your money in toilet paper! Wait no Crap the indians get by without it, generally!
Most of us here are on the ball and are planning!

The biggest question or food for thought for me is; why in the fuck does everyone believe germany is bailing everyone out or is Safe&Secure. Germany is an Export Market ( Those massive container ships sail every 3 minutes down the elba ) with No real Energy. If EU fell badly and the US and China say fell moderately all those manufacturing jobs and export products in germany collapse.
As we are banned from seeing the EU Books then i have to believe german banks are leveraged to the hilt like everyone else.
It's not a coincidence that Chinas president visits Russia first Up and as the german gold is not coming back anytime soon if i were them i'd be looking for a meeting with those two countries pronto.

sadmamapatriot's picture

Boston Consulting Group already answered the question. No wait, they suggested it. Check it out at the top of page 12, 25% "one time" wealth tax for Americans. 

Yes, that BCG.

ZH posted about it back in September 2011.


Bicycle Repairman's picture

I read the report and it is unnerving.  Not just the "one time" tax.  I was troubled by:

1.  The scant mention of our energy problems and the associated drain on the economy.

2.  Their emphasis on "education" as a solution, but no addressing the education cartel.

3.  No addressing of the health care cartel.

4.  No addressing of the MIC.

This paper was about floating a trial balloon on the tax, and that is it.  These guys aren't that stupid.  They are that venal.

ATG's picture

You go GW and MA:


'March 22nd – Just Amazing':

Paracelsus's picture

As demonstrated in Bosnia,Iraq,Afghanistan,and many other places,the central authority of a government rarely extends past twenty miles outside the capital city. D.C. can pass all the laws they want but enforcing them will be another matter. Perhaps this is what all the drones are for (and the APC's?) We will have a bunch of disillusioned,traumatized,bitter Veterans coming home soon.They will find that their experience in killing isn't easy to encapsulate on a resume.This will be a critical social problem if the example of the Vietnam war is any indicator. The strategy of abandoning the draft and going to an all volunteer force,and the patriotism after 9/11,might make for a perception of betrayal felt by some troops (also comparable to Vietnam veterans,and in some case even the Korean war veterans,also a U.N. sponsored military action).

IamtheREALmario's picture

I feel for the kids who felt they had no better options than join the military and somewhat for those who bought the lies about honor and duty. As for those who wanted to join so that they could murder and those who became officers because it gives them power and prestige (and an "in" to cushy government jobs and a quick pension) not at all.

There is no honor in doing the dirty work of murderous psychopaths who only want to terrorize others, kill them and take their possessions under the false guise of national defense or a righteous war. It is only dishonor and opportunism. They should not be so stupid or willingly complicit.

Those who I know in the military say it is a great experience because the bonds and comraderie created there can be found nowhere else ... and I believe that... or maybe the same bonds and comraderie can be found within street gangs.

Paracelsus's picture

I find it interesting all the fuss in America about firearm confiscation.What the real conversation should be is over confiscation of chainsaws. Once the shit happens everyone will be leaving the big cities in search of food supplies. The locals will not find this desirable and will barricade the roads with fallen trees. Hence the sales of SUV's. Only an armed person,able to travel cross country will have a chance.

Anyway,cities won't be any place to live without power and security.We are witnessing the self-inflicted destruction of our society,due to the whims of a very small group of sociopaths. Oh,and those chainsaws are good for one other thing as demonstrated in numerous Teen movies.  

Bloodstock's picture

What's the point of asking the question? They've done what they've done and it is obvious as hell that they will do what they do. They steal and they will steal again, and again. It's just a game guessing as to when one beginns to pull their paper money out of the paper banks.

Tsunami Wave's picture

"Bernanke entirely failed to answer the question which was actually asked … and has thereby caused a tsunami of distrust on the Internet."


You called??

ilovechina's picture

The point is the banking illuminati plans to seize the bottom 95% 's money to bail out the 50:1 leverage they have built up. QE, re-inflation, twist, forcing unemployment up, forcing wages down, stealing bank deposits, confiscating gold, artificially supressing the gold price, giving rates of 0.5% to savers and borrowers 4%-15%. Its all the same shit. Either we revolt or we accept the situation and negotiate the pain of least pain.

Which to be honest is a 10% deposit tax on all securities.
Eitherwise bernanke is going to print another 10 trillion USD, which equals 100 trillion at 10:1 leverage. your money will then depreciate more than 10%. whether or not gold goes up is not certain unless china/russia/asia force the issue by accumultaing so much the USA is powerless to supress the price.

i fucking hate central banks, but i already know us the people already have their cock half way up our arse, so i just wish they would create a fast solution. so the polarisation of wealth can stop and the economy can move out of this brutal stagflation.

i vote for a 10% tax on all savings in usa and europe
of course i would say that, all my assets are in singapore.


ParisianThinker's picture

Bonjour James,

If you are a US citizen, IRS form 8938 lets Uncle Sam know where your finanical assets are deposited, n'est ce pas? Nothing will stop them from confiscation. Maybe we should all buy art, antiques and diamonds?

Agstacker's picture

My savings are in the form of silver rounds and 90% silver coins, if they want to tax it let them come and tax it, it's sitting next to my belief in the 2nd ammendment.  

lolmao500's picture

Initially, the FDIC only insures deposits up to $250,000. So deposits over that amount are unprotected.

Even BELOW that it's not protected. FDIC insures you against a bank failure... but guess what, it doesn't insure you against the government seizing your assets since it would be a TAX...

ParisianThinker's picture

This would make it similar to being forced to buy ObamaCare?

It is a tax, n'est ce pas?

DOT's picture

Let's ask Chief Justice Roberts, he is sure to know. 

IamtheREALmario's picture

Well, technically the taking of principal is theft whether they call it a tax or not. It is theft.

q99x2's picture

It is frightening to see how frail these banksters are. Things get bad they'll trample one another as they try to get into the bunkers.

Vendetta's picture

more like things get bad and their gulfstream's will run into each other on the tarmac as they scramble to fly away to get to their homes on some remote island.

ebworthen's picture

Thank you, thank you, thank you.

I was aghast that Bernanke did not make a definitive statement against the ECB and IMF proposed theft.  Not surprised especially, but amazed that he did not say something more equivocating and maudlin.  He condoned it, he knows it is an ace up his sleeve and believes that deferring the question with euphemisms will keep the U.S. and Europe cash in deposits intact.  An incredible failure due to hubris.  I was paying attention, were you?



ParisianThinker's picture

Racketeers! It's anything goes for their own power and profit. No protections anymore! US Constitution is DOA.

Toma Haja's picture

I don't suppose the question was asked if Bernanke was consulted prior to the ECB IMF proposed theft.

Was he part of the decision?

The Fed was totally out of the loop?

After the billions, or is it trillions, that the Fed has funneled to the European banks.


ebworthen's picture

I don't recall him being asked directly about being consulted, though he did say he was not "part of the discussion" about the decision - truth or lie he denied he was in the loop.

Considering the billions/trillions he has funneled to European banks you would think he would be in the loop.

Whether he was or was not "in the loop" the real clincher is that he did not say it was unfair or something he would not do in the U.S.

This means it is a policy tool he views as valid and one he would employ on U.S. accounts.

If you think it is wrong you say "The FED will NEVER place a levy of this kind on U.S. deposits."

If you think you might need the tool, you say "They need to find the resources to address the crisis" which is what he said, and dodge the direct questions.



DarthVaderMentor's picture

I keep asking the same question which no one seems to be able to answer: "How much US personal and private and how much US bank money is in Cyprus?" 

tony bonn's picture

this question was bogus.....bernankula is head of a private consortium of nazi banksters....the fed is not a government institution....what he says has absolutely no bearing on decisions made by soeotoro's nazi government...

even so, the fed has a powerful private police force which could of its own accord steal those deposits with great ease....when all of those crapulent "assets" he bought prove illiquid, the fed is going to seize property....

it is no longer a matter of if, but when.

Toma Haja's picture

Is not the power to impose zero percrent intererst on savers while inducing inflation thru QE the same as a seizure of property.  Just not blatant.

ParisianThinker's picture

How right you are! This is what the central bankers plan to do too.

steve from virginia's picture




First of all, Bernanke cannot answer for the FDIC which is an independent agency and is answerable to the Treasury and Congress not the Fed.


Second, the Fed doesn't make government policy, it cannot say for sure what the government will or will not do at some future time regarding property rights. The government might decide to appropriate deposits or other property or it might not. It depends on circumstances.


If it comes to pass that the government is seizing private property chances are there will be more significant problems to contend with.


The word that describes the ongoing state of affairs in this world is 'less'. That includes less money, less property, less comfort, less prosperity, less security ... less.


I'm not sanctioning anything, just describing. Thank you.



HardAssets's picture

Quit reading the b.s. they put out in press releases and your old college textbook.

Youd do better getting a real education on 'the system' by watching the Godfather movie series this coming weekend.  (Suggestion by Catherine Austin Fitts).

ParisianThinker's picture

Less is the new "more" as you say. You are so right!

hound dog vigilante's picture


"First of all, Bernanke cannot answer for the FDIC which is an independent agency and is answerable to the Treasury and Congress not the Fed."

independent agency... that's a good one.  The PTB sent the Fed & Treasury into Congress in 2008 and extorted a trillion dollars without breaking a sweat.  

"Second, the Fed doesn't make government policy, it cannot say for sure what the government will or will not do at some future time regarding property rights. The government might decide to appropriate deposits or other property or it might not. It depends on circumstances"

Dude - you're a laugh riot... the benevolent socialists of Europe already decided to appropriate deposits - the precedent has been established.  Would you rate US leadership as more or less trustworthy than their european counterparts...?

"If it comes to pass that the government is seizing private property chances are there will be more significant problems to contend with."

That day is here & now.  Better get that noggin of yours working on those more significant problems.