Germany Blesses "Bail-In" Deposit Confiscation Plan For Failing EU Banks

Tyler Durden's picture




 

One year earlier than required, the German government approved plans to force creditors into propping up struggling banks across Europe. As WSJ reports, Germany "leads the way" in Europe by implementing European rules quickly and "creates instruments that allow the winding-down of big systemically relevant institutions without putting the financial stability at risk." What this means is that taxpayers (theoretically) will not be on the hook (though in reality we are sure the mutually assured destruction defense will be played - especially if Deutsche runs into problems) but as German authorities explain, "This ensures that in times of crisis mainly owners and creditors will contribute to solving the crisis, and not taxpayers." As a gentle reminder - creditors includes depositors... remember Cyprus?

As WSJ reports, Germany's cabinet Wednesday approved plans to force creditors into propping up struggling banks beginning in 2015, one year earlier than required under European-wide plans that set rules for failing financial institutions.

The new bail-in rules are part of a package of German legislation on the European banking union--an ambitious project to centralize bank supervision in the euro zone and, when banks fail, to organize their rescue or winding-up at a European level.

 

Germany "leads the way" in Europe by implementing European rules quickly and "creates instruments that allow the winding-down of big systemically relevant institutions without putting the financial stability at risk," the country's finance ministry said in its draft bill seen by The Wall Street Journal.

 

"This ensures that in times of crisis mainly owners and creditors will contribute to solving the crisis, and not taxpayers."

 

...

 

Germany will apply these rules already from next year, according to the bill. Struggling bank creditors, in addition to shareholders, will have to help financial institutions, covering up to 8% of liabilities, before the banks can tap Germany's financial markets stabilization fund SoFFin.

Not everyone's buying the no-taxpayer-impact concept...

In an expertise report presented Wednesday, Germany's independent Monopoly Commission, which advises the government on competition and regulation issues, said its "skeptical whether market participants can muster sufficient capital buffer to effectively prevent the general public from being held liable."

*  *  *
So Djisselblom's 'levy on wealth' appears to be getting closer and closer...

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Wed, 07/09/2014 - 17:43 | 4941073 StacksOnStacks
StacksOnStacks's picture

Cue zee bank run

Wed, 07/09/2014 - 17:45 | 4941080 wee-weed up
wee-weed up's picture

If it's not in your hot little hands...

You don't own it!

Wed, 07/09/2014 - 17:56 | 4941090 Stackers
Stackers's picture

Bail-ins are already part of the Dodd-Frank Act.

 

Title II - Orderly Liquidation Authority

http://www.law.cornell.edu/wex/dodd-frank_title_II

" One final provision of importance is the ban of use of taxpayer funds to preserve a company that has been put into receivership under Title II. See 12 U.S.C. § 5394 (Dodd-Frank Act § 214). In essence, this provision prevents any future government bailouts for struggling financial institutions, no matter how big, or how impactful their failure might be. This provision makes it even more critical that a liquidation under Title II work quickly and effectively; without the safety net of federal bailout money, a failing financial institution will have no choice but to liquidate. "

" Claims are paid in the following order: (1) administrative costs; (2) the government; (3) wages, salaries, or commissions of employees; (4) contributions to employee benefit plans; (5) any other general or senior liability of the company; (6) any junior obligation; (7) salaries of executives and directors of the company; and (8) obligations to shareholders, members, general partners, and other equity holders. "

 

Wed, 07/09/2014 - 17:58 | 4941112 stacking12321
stacking12321's picture

spain just imposed a *retroactive* tax on bank accounts effective 1/1/2014:

http://globaleconomicanalysis.blogspot.com/2014/07/spain-issues-retroact...

only .03%, maybe a "test case" to see how people react to wealth confiscation?

 

Wed, 07/09/2014 - 17:58 | 4941124 Greenskeeper_Carl
Greenskeeper_Carl's picture

All of this will happen in America eventually. It may be a couple years, but it's coming. And you will here everyone cry "who could have seen this coming?"

Wed, 07/09/2014 - 18:16 | 4941168 post turtle saver
post turtle saver's picture

the banks in the eurozone countries have around ~1 trillion euros in unsecured bonds... about a fifth of that is held by German banks... hmmm...

the PIIGS look like they're going to get swine flu again... hold on, it's gonna be a bumpy ride...

Wed, 07/09/2014 - 19:15 | 4941316 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

stacking12321

Oh that's *really great* re a retroactive tax on bank accounts.  That makes it more likely that people like me will pull more money out faster and sooner than otherwise.  And that Dodd-Frank (FrankenDodd?) language in the law, even faster.

Gold, Bitcoin, hard assets and assets far away.  Looks like the the time is coming soon that assets out of the system will be the only safe assets left.  Haircuts or losses (eg stocks & bonds) on the rest.

Prepare...

 

EDIT:

ALL remarks above got my + 1

Wed, 07/09/2014 - 19:26 | 4941365 disabledvet
disabledvet's picture

Long Smith and Wesson 44 Magnums...and Clint Eastwood. "With Chinese subtitles."

Wed, 07/09/2014 - 19:36 | 4941399 WhackoWarner
WhackoWarner's picture

Sir Do Chen?

Asked this yesterday.  So bank accounts and anyting traceable are being targeted.  Seems like the only place anywhere on this planet is your mattress or hole in the ground.  So when gov, scrutiny aims to capture every transaction and asset?  Who wiill buy the bullion?  All traceable or getting there.

Bitcoin?  I really do not know about right now. 

Wed, 07/09/2014 - 20:16 | 4941524 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

WW

1)  .gov is not very effective im confiscating illegal drugs in their bogus "Drug War".  There will always be someone around who will buy your gold...

2)  Diversification is one way to win.  Our Peruvian company is thinking of selling bonds at 2%... (smile)

3)  Only do Bitcoin if/when you are comfortable with it.  I am getting more inclined to think it is a nice solution for, say, 1% of one's wealth (I am NOT there at 1% in BTC).

4)  It id debatable that .gov would get that strong ("1984") without a serious fight, so lead bullion (and delivery devices) are good too...

5)  Similarly, productive farmland on a small scale would be relatively safe (can be taxed though, or seized, "emergency"...).  I do not own farmland.

6)  Mattress ("Bank of Sealy") and a hole ion the ground are part of diversification.  Holding CA$H is OK as well, same reasoning.

Wed, 07/09/2014 - 20:28 | 4941559 WhackoWarner
WhackoWarner's picture

Do Chen.

Gov. can't track drugs?  Come on Gov. is drug trade.  They track the big guys and take their cut.

Diversification?  Any investment in anything anywhere is being targeted.  They are now going down the list.  Bank accounts?  Check.  NEXT is every brokerage account anywhere.  And next is any "below surface" investment that was enabled years ago....read bullionbank or other offshore storage.  So what does Peruvian bond mean when all financial transactions are being met-data'ed?

Bitcoin is infant and prime for abuse.

Gov. is not that strong? Well looks to me like people are rolling over everywhere with very little test case.

Farmland. Yes of course but ultimately people need to transact.  Cash under the mattress will work.  But who will buy $100K of bullion without a trace?  I bought bullion from reputable dealers who are confined in their business with reporting rules.  Local economy?  Can that absorb my stash and give fair value?

Thu, 07/10/2014 - 01:37 | 4942361 DoChenRollingBearing
DoChenRollingBearing's picture

Our Peruvian bonds would not be listed on any exchange, no meta-data either as long as email encryption is strong enough or you send BTC...  Think for a moment, WHY would we offer only 2% or less...?  Smile,,,

We are not big guys (me anyway, for the moment I am presuming you are not a big guy), it will be hard for .gov to track all the Little Fishez ("The Firehose Problem") and what they are doing.  Sure, anything in an environment that is computerised is at risk (in Peru they have to send EVERY Invoice by email to their taxation authorities).

I am confident that almost ANYWHERE there would be someone who would quietly take your gold or sell you some.

Your comment on the people rolling over is a valid concern.  But, there are some 300 million guns in America (80 million owners).  "There are more of us than there are of them."  And, if necessary, we would fight dirty if they try to drone us...

Wed, 07/09/2014 - 20:39 | 4941579 WhackoWarner
WhackoWarner's picture

Wth all due respect DoChen:

http://beyondjimwillie.blog.com/

Thu, 07/10/2014 - 01:29 | 4942349 DoChenRollingBearing
DoChenRollingBearing's picture

Will do, anyone who is further out than Jim Willie is worth a read.

Thu, 07/10/2014 - 02:56 | 4942418 SF beatnik
SF beatnik's picture

Yeah, this is quite a read!

Zeros, take note,

Wonder whether Dr. Jim himself will address these posts. 

Author goes unnamed? 

Wed, 07/09/2014 - 18:09 | 4941159 post turtle saver
post turtle saver's picture

I've lost track of the amount of unsecured bonds Spanish banks have issued over the last couple of years... the backdraft on that is going to be breathtaking...

Wed, 07/09/2014 - 19:29 | 4941371 disabledvet
disabledvet's picture

"O weeeeee phuck!"

That's gonna leave a mark.

The last time it was Russian billionaires jumping in front of trains.

Wed, 07/09/2014 - 19:02 | 4941273 WhackoWarner
WhackoWarner's picture

.03% I think is only a tiny test of the waters...the IMPORTANT point is that it was retroactive so nobody (unless real insider) could be warned.  So according to this the gov. gets your Jan. 1 bank statement and takes from there.

Pretty good reason to keep away from banks altogether.  This is more than a bail-in for failing banks.  This would get balances in every Credit Union, trust co, chartered bank.  Any money anywhere.

.03%  Just the friggin start.

Good thing I have a waterbed.  Way heavier than ordinary mattress.

Wed, 07/09/2014 - 19:24 | 4941362 WhackoWarner
WhackoWarner's picture

So who is to say this retroactive tax of .03% does not climb to 10% or 15% or 50%?

Wed, 07/09/2014 - 19:31 | 4941376 disabledvet
disabledvet's picture

"Long shreading machines." Might have to go long Staples tomorrow.

Wed, 07/09/2014 - 18:17 | 4941175 teslaberry
teslaberry's picture

instead of following bankruptcy rules, frank dodd allows for lawful theft of creditors money normally called 'deposits'. 

THE LIABILITIES OF THE BANK (IT'S DEPOSITS) NOW BECOME THE BANKS ASSETS!. 

SO FOR THE REST OF YOU AMERICANS WHO HAVE TO PAY OFF YOUR CREDIT CARDS, JUST REMEMBER THE BANKS CREDIT CARD (YOUR DEPOSITS) NOW BELONG TO THE BANK!

 

 

Wed, 07/09/2014 - 19:28 | 4941368 WhackoWarner
WhackoWarner's picture

So?  Am I following here?  The bank owns the credit card same as they "own" the deposit?  So we default and then they "own" the debt balance?

Wed, 07/09/2014 - 19:33 | 4941391 disabledvet
disabledvet's picture

Plus the 100 billion they "loaned themselves" through Bear Stearns...all internally done and therefore not really subject to any rule anyone could recall actually.

At least "not at that meeting we didn't have and you don't need to know about."

Oh, and "yes, they control the media too."

Almost makes the US Government look small...war and everything.

Wed, 07/09/2014 - 17:56 | 4941114 post turtle saver
post turtle saver's picture

all savers and bond holders are evil and should be punished... what Germany is saying here is basically, "don't save your money in a bank or be a bank creditor or you'll be sorry..."

it's official, EU has jumped the shark

Wed, 07/09/2014 - 17:58 | 4941122 Pairadimes
Pairadimes's picture

It's yours until the banks need it, then it's theirs.

Wed, 07/09/2014 - 18:08 | 4941155 El Vaquero
El Vaquero's picture

It's theirs the moment you deposit it, as you become an unsecured creditor.

Wed, 07/09/2014 - 19:35 | 4941397 disabledvet
disabledvet's picture

That sounds like a buy recommendation actually. Sorry...not going there either. "If you want your bank debt...you can have your bank debt!"

Wed, 07/09/2014 - 19:16 | 4941331 WhackoWarner
WhackoWarner's picture

It has always been theirs.  Prior to this nonsense they at least gave you a few pennies every month for the ability of using your deposit as the basis of lending at way higher rates of interest.

 

Now we get nothing and risk, the real risk, we risk being fleeced retroactively on top of the taxes we paid already.  Sheesh almighty when are people going to wake up to this.  The plan is unfolding completely in the open. Right in plain view.

ONLY question is where on earth to hide?

Wed, 07/09/2014 - 19:26 | 4941364 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Our bearing import company in Peru is thinking of issuing bonds at 2%.  

/seriously?

Wed, 07/09/2014 - 19:38 | 4941405 disabledvet
disabledvet's picture

"SO I WHIPPED OUT MY BIG TEN INCH! (record of the band that plays the blues.)" belly up to bar bro! Before we burn it to the ground!

Wed, 07/09/2014 - 20:14 | 4941520 WhackoWarner
WhackoWarner's picture

If the bank owns it all and it is clearly stated that every credit card actually belongs to the bank?  Guess what you also own my debt. So run them up folks and default.  Why can I not default?  Where is my bail-in?

My credit cards (faithfully paid off) could also easily become "minimum payment" debt. Here in Canada the credit card statements have to show how many years at minimum payment it would take to pay off the principal + interest.  IT amazes.

Minimum payment in many cases results in a 30 year repayment.  Thanks bank.  I default. it is your property, your risk. your debt.  I know it sucks but so does retroactive taxation.

Wed, 07/09/2014 - 22:38 | 4941976 UselessEater
UselessEater's picture

When the middle class try to default are they going to make it easy? Doubt it because they want us eliminated so if you default, say bye to any assets they can seize and hello to leins on any and all future income.

Jim Sinclair paints a reasonable picture from the 30 min mark covering the Great Flushing (Lehmen), Great Leveling (2014-2016), followed by the Great Reset. In this clip he specifically mentions they are after the middle class (white collars) having destroyed the blue collar and lower class - as we know this group relies on social security support in most western nations today. He ends with stating gold unlikely to be confiscated but expect a windfall gains tax.

https://www.youtube.com/watch?v=8IQ_TBJHrcU&list=TLMugyaGX0AcQ5ry0pyPPnY...

 

Sat, 07/12/2014 - 06:25 | 4949570 zerocash
zerocash's picture

As long as NASA doesn't find out about your gold stacking you will be fine.

Wed, 07/09/2014 - 17:44 | 4941074 earleflorida
earleflorida's picture

and so, another white lie, to be out'd by tyme

Ps. feeling sorry for the proletariet that will swallow this bitter pill of latent reality

thankyou Tyler

Wed, 07/09/2014 - 19:16 | 4941335 DoChenRollingBearing
DoChenRollingBearing's picture

Yes, Tyler sounded the alarm for all who will listen.

Wed, 07/09/2014 - 17:44 | 4941078 fonzannoon
fonzannoon's picture

If depositors are creditors then how the hell does it not involve the public?

Deutsche Bank is fucked.

Wed, 07/09/2014 - 17:49 | 4941084 walküre
walküre's picture

Austria Alpe Hypo Real Santander Banco Catastrophale Di Medici Terminato Vaticano Popi Dei Totalo Capputto

Wed, 07/09/2014 - 17:50 | 4941089 fonzannoon
fonzannoon's picture

Lumber liquidators is liquidating a lumber (taking a dump for those who don't understand my humor) after hours.

  • http://static3.cdn-seekingalpha.com/images/bullets/mc_bullet.png?1396773...) 2px 8px no-repeat !important;">CEO Robert Lynch: "Customer traffic to our stores was significantly weaker than we expected, particularly in geographic areas severely impacted by the unusually harsh weather in the first quarter ... Our reduced customer traffic has coincided with certain weak macroeconomic trends related to residential remodeling, including existing home sales."
Wed, 07/09/2014 - 17:54 | 4941100 walküre
walküre's picture

That's a no brainer. The yards in WA and OR where they store logs are pretty empty because there's little demand. I still think that "Sandy" pushed demand for lumber which had nothing to do with ordinary building permits and construction numbers. Sandy skewed the market for lumber at a time when it fit the "recovery" theme. Of course there's no demand otherwise. Prices were at all time highs and building got too expensive.

What do you make of AA results? For real?

Wed, 07/09/2014 - 17:57 | 4941118 fonzannoon
fonzannoon's picture

I think they are lucky enough to join the U.S Steel crowd where they somehow continue to operate with massive losses but their stock will continue to move up and be held up as a barometer of the recovery taking place right under our noses that is not taking place. It's possible that if anyone ever actually looks under the hood they will find Arthur Anderson helping with their earnings reports. However that may be several hundred points higher on the SPY from now.

Wed, 07/09/2014 - 18:15 | 4941170 walküre
walküre's picture

I'm doing my part. I need to put down 600 sq ft of wood flooring and buy some nails and screws. Prices are huge but the wife is "eager" to get it done. Two legged pressure cooker. Oops, probably shouldn't have used that word. Oh well, NSA have at it. How many more CIA spies are there at the BND? 2 and counting.

Wed, 07/09/2014 - 19:41 | 4941408 disabledvet
disabledvet's picture

Soundsike a collateral call...and "that ain't gold. VERY fine wide. Well, actually cheap ass shit yellow pine that's as straight as a Chicago politician"...but hey, to the right buyer!

Wed, 07/09/2014 - 17:51 | 4941092 Buckaroo Banzai
Buckaroo Banzai's picture

Maybe things work differently in Germany, but in this country, the people who pay taxes tend to have bank balances, and the people who don't pay taxes, don't.

Wed, 07/09/2014 - 17:54 | 4941105 walküre
walküre's picture

German savings rates are at all time highs. Good time for a raid.

Wed, 07/09/2014 - 19:43 | 4941416 disabledvet
disabledvet's picture

Operation Zitadelle of finance.

I wonder where Putin is hiding his stash.

"Prepare for massive counter offensive"?

Wed, 07/09/2014 - 18:47 | 4941238 F0ster
F0ster's picture

Saving the taxpayer is fascist code for saving the government

Wed, 07/09/2014 - 17:45 | 4941079 Oldwood
Oldwood's picture

When being fucked, does it really matter if you are on the top or the bottom? Those at the top of the pyramid will do what they can to force any real losses on everyone below them, call them creditors, owners or the lawn guy.

Wed, 07/09/2014 - 17:53 | 4941098 Seasmoke
Seasmoke's picture

My swears by the Top. Every single time !!

Wed, 07/09/2014 - 19:45 | 4941419 disabledvet
disabledvet's picture

No expert but isn't being raped different?

Position actually might matter if we're talking the latter.

Wed, 07/09/2014 - 17:57 | 4941116 lasvegaspersona
lasvegaspersona's picture

The ECB has been all but telling folks 'do not leave your money in the banks'. Anyone who misses that hint deserves to be fleeced.

I think I heard Draghi say 'buy gold' too.

These guys are done with the current system of dollar domination. They have gold, marked to market, on their balance sheet and all it takes for them to be the world's #1 medium of exchange is a dollar collapse. If the dollar is at zero their gold goes to  infinity (in dollar terms). From then on it is up to the rest of the world to decide what a Euro (and thus gold) is worth.

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