Fed Vice Chair Fischer On U.S. Bailin "Proposals"

GoldCore's picture

Fed Vice Chair Fischer On U.S. Bailin "Proposals"

Federal Reserve Vice Chairman Stanley Fischer delivered his first speech on the U.S. and global economy in Stockholm, Sweden yesterday.

Fischer headed Israel’s central bank from 2005 through 2013 and is now number two at the Federal Reserve in the U.S. after Janet Yellen.

Janet Yellen and Stanley Fischer

In a speech entitled, The Great Recession: Moving Ahead, given at an event sponsored by the Swedish Ministry of Finance, Fischer said that the economic recovery has been and remains “disappointing.”

“The recession that began in the United States in December 2007 ended in June 2009. But the Great Recession is a near-worldwide phenomenon, with the consequences of which many advanced economies--among them Sweden--continue to struggle. Its depth and breadth appear to have changed the economic environment in many ways and to have left the road ahead unclear.”

Speaking about the steps that have been taken internationally in order to “strengthen the financial system” and to reduce the “probability of future financial crisis,” Fischer said that the U.S. was preparing proposals for bank bail-ins for “systemically important banks.”

Additional steps have been taken in some countries. For example, in the United States, capital ratios and liquidity buffers at the largest banks are up considerably, and their reliance on short-term wholesale funding has declined considerably. Work on the use of the resolution mechanisms set out in the Dodd-Frank Act, based on the principle of a single point of entry--though less advanced than the work on capital and liquidity ratios--holds the promise of making it possible to resolve banks in difficulty at no direct cost to the taxpayer.

As part of this approach, the United States is preparing a proposal to require systemically important banks to issue bail-inable long-term debt that will enable insolvent banks to recapitalize themselves in resolution without calling on government funding--this cushion is known as a "gone concern" buffer.”

Bail In Infographic International Edition.JPG
See guide to coming bail-ins here
Protecting Your Savings in the Coming Bail-In Era

Fischer’s comments that the U.S. is “preparing a proposal” for bail-ins is at odds with Federal Deposit Insurance Corporation (FDIC) and Bank of England officials who have said that bail-in legislation could be used today.

The U.S. already has in place plans for bail-ins in the event of banks failing. Indeed, the U.S. has conducted simulation exercises with the U.K. in 2013 and again this year.

On October 12 2013, Art Murton, the FDIC official in charge of planning for resolutions, and the Bank of England’s Deputy Governor Paul Tucker, both confirmed that the U.S. system is ready to handle a big-bank collapse.

The Bank of England’s Tucker, who has worked with U.S. regulators on the cross-border hurdles to taking down an international bank said that “U.S. authorities could do it today -- and I mean today.” 

There is speculation that were Yellen to retire early Fischer would be anointed as the new Federal Reserve Chairman. 

Fischer who previously was chief economist at the World Bank, also makes it clear that he expects ultra loose monetary policies to continue in the U.S. which will be bullish for gold and silver.

Today’s AM fix was USD 1,311.00, EUR 982.76 and GBP 781.75 per ounce.
Yesterday’s AM fix was USD 1,308.25, EUR 977.33  and GBP 779.37 per ounce.

Gold fell $2.30 yesterday to $1,309.10/oz and silver rose $0.07 or 0.35% to $20.04/oz.

Gold popped higher today as equities fell on news that a Russian aid convoy is heading to Ukraine and on signs that the new deepening tensions and risk of conflict with Russia is hurting confidence in the euro zone economy.

 The Zew think tank in Germany reported a drop in investor confidence to its lowest level since 2012 due to the risk that economic sanctions pose to fragile economies. This helped push European shares and the euro lower, while boosting German bunds and gold.

Gold is marginally higher in London this morning after gold in Singapore fell to test $1,305/oz overnight again. Futures trading volume was 36% below the average for the past 100 days this morning as Wall Street remains on vacation.

Gold in U.S. Dollars - 1 Year (Thomson Reuters)

Spot gold was up 0.3% at $1,312.70/oz at 1230 GMT, while U.S. gold futures for December delivery were up $1.80/oz at $1,312.30.

Silver for immediate delivery rose 0.1% to $20.18 an ounce. Spot platinum was flat at $1,473.63 an ounce, while palladium edged closer to multi year nominal highs and was 0.5% higher at $882 an ounce.

Russia said a convoy of 280 trucks had left for Ukraine today carrying humanitarian aid. U.S., EU and NATO officials warned that the help may be a pretext for a Russian invasion.

Gold has climbed about 9% this year, mostly on geopolitical tensions between the West and Russia over Ukraine, and violence in the Middle East. Gold is seen as a safe haven investment to hedge riskier assets such as equities.

Many market participants are surprised that gold has not seen greater gains and is flat since February. Given the degree of geopolitical uncertainty and the fact that this uncertainty is likely to disappear anytime soon, gold should have seen greater gains.

Submitted from here U.S. Bail-Ins - Fed Vice Chair Fischer Says “Preparing A Proposal” 

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q99x2's picture

Imagine that. Looks like Israel needs your savings. 

Squid-puppets a-go-go's picture

"Fischer headed Israel’s central bank from 2005 through 2013"

I am absolutely stunned. Next months headline

'The Israel military needs US taxpayer's remaining savings as bail-in money to finish pushing the palestinians into the Meditteranean, US congress in unanimous support'

AdvancingTime's picture

Fischer and Yellen don't seem to grasp the fact that debt does matter and that both people and governments have lived beyond their means by taking on debt they cannot repay. Over the last several decades we have created entitlement societies built on the back of the industrial revolution, technological advantages, capital accumulated from the colonial era, and the domination of global finances. Promises were made on the assumption that the advantages we enjoyed would continue.

Ever greater prosperity and entitlements were to be sustained through debt financed consumption growth. In that eerie fantasy world, debt fueled consumption was to be the catalyst to bring about evermore growth. Now reality has begun to come into focus and it is becoming apparent that this is unsustainable. The entitlements and promises that have piled up have become overwhelming. More on why this system will fail in the article below.


MrBoompi's picture

There is much more debt than there is "money".  In fact, without the constant creation debt the monetary system would collapse.  Since debt is created out of thin air and loaned out, all of the money in existence is actually owned by somebody else, which is why the central bankers consider everyone's money as their own.  All the debtors, including taxpayers, have to repay both the principal and the interest on debts.  Since only debt is created at the time a loan is made, this makes it a mathematical certainty that more debt must be created to cover the interest payments due at a later date.  The most powerful people in the world own this debt creation machine.  Anyone who messes with it will soon be taking a dirt nap.  These folks consider billions of us as nothing more than worthless insects. 

Arkadaba's picture

I don't know if ZH already covered this story (looked but did not find anything). 

Investor ratings service Moody’s has changed its outlook for Canada’s biggest banks to negative from stable, citing concerns over the Canadian government’s plan to implement a “bail-in” system in the event of a bank failure.

The “bail-in” rule, included as part of the 2013 omnibus budget bill, asserts that the federal government would not necessarily bail out a bank on the brink of failure with taxpayer money.

Instead bank bondholders would be expected to assume the risk, though there is no guarantee that deposit-holders would not be hurt if they had more money in the bank than the $100,000 guaranteed by CDIC.


Mr. Ed's picture

Gratuitous stories like this have been showing up with increasing frequency for a while now.
I expect most of the newly frightened bigger fool sheeple have dived into PM's or RE.  The RE that's being bought up is mostly land since the carry cost is low (until bankrupt municipalities step on the property tax accelerator) and since there's nothing to be managed or maintaned.  Another reason the bigger fools go for land is the price range:  houses seldom go for less than 100K, but land can be picked up in small denominations all way down to a few hundred bucks.  What I see on various online auction sites is sad:  unliveable land with near impossible access, in the middle of nowhere going for up to a thousand an acre.  The ad text often directly addresses the fear promoted by these stories.  I think there've been more bigger fools born lately than in the year preceding the Great Recession.  They will never unload the crap they;re buying at more than small fraction of what they paid (unless they can find an even BIGGER fool)... but, they will temporarily inject $$$ that will support consumer demand.

Guess the Fed's bright idea is that it'll juice the economy...

Does anyone here have details about what's happening in other asset markets?

Downtoolong's picture

Don’t you just love it when they smile and look like they know it’s a scam, and they know you know it’s a scam, and they know you know they know it’s a scam, and they think that’s just the funniest f^&cking thing ever?

Bioscale's picture

And alltough everyone know it's a scam, noone ever is going to talk about it in deep details in public. It's some kind of unspoken mystery about how the society is fucked up and indifferent to things that tend to be a bit more complex and require not more than 4 minutes of analytical thinking which hurts the most 'citizens' a lot. Fuck.

optimator's picture

Especially when they know there isn't a thing you can do about it.

RaceToTheBottom's picture

The need for a concept of a bail-in should be viewed as a failure.  Why is a bank different than any other business?

Stockholders, bondholders should be screwed just like any other business, in the same order.

FDIC amounts already defines which depositor money is safe and which is at RISK (If you believe that number????).

The problem of TBTF should be solved by reducing the TBTF not by screwing the depositors....

Let the friggin Bankster CEO feel the pain of the marketplace


pherron2's picture

It is uncanny the resemblance yellen bares to the banking characters in one of those harry potter films.

Bioscale's picture

Who cares about bail-ins? Only fools have their savings in banks. It's time to teach those little folks a bit about how fucked up the banking and financial system really is.

During the recent years I tried to explain to people I know how risky it is to keep money in a bank. They all just starred at me like I was a Santa Claus and kept their money there further. Those deposits are insured after all!

Most of people will only learn on their own mistakes.

blindman's picture

no one keeps money in a bank, it is impossible.
people finance the bank with their credit notes.
there is a distinction with a difference that
the term "bail-in" should be revealing to the
misinformed, but no. the herd is very slow to unlearn
the illusions of the shepherd, even when the butchering
commences; it seems unavoidable.

Seasmoke's picture

Go ahead Fisher, Have a Bail In.......and East St. Louis will look like a vacation at Disney World

vyeung's picture

its happening. WHY? Becoz the criminals in DC don't belong to anyone nation. They use their country of residence as a host, just like parasites and will not hesitate to destroy it in the name of their cause and of course $$$$. They are what the American public do not see and touch who are governing their country since 1913.

Monty Burns's picture

"Becoz the criminals in DC don't belong to anyone nation. "

Of course not. As dual citizens they automatically belong to two nations.

Utah_Get_Me_2's picture

this cushion is known as a "gone concern" buffer

The Orwellian bullshit never ends with these criminals.

SamAdams's picture

Welcome to Southpark Federal, Kyle.  We just deposited your savings..... aaaand it's gone....  It's been a pleasure.

Comte d'herblay's picture

Missed that, yet another Jew in the Fed, right next J Yellen. Jeessyusss h Christ!!   Can't anyone else see this total control by one nationality???  If they are all Italian, Irish, or Black, someone would be screaming into the abyss about this conspiracy, yes conspiracy.

"Conspiracy ain't a theory; It's a felony".

q99x2's picture

The Caliphate sees it. Everyone sees it but what you going to do about it sucker.

TheReplacement's picture

Dual nationality - that there is a real problem.  How can we expect patriotic leadership and management from people with split loyalties?

RaceToTheBottom's picture

No conflict of issue at all.  Their loyalties have always been toward Large Money and themselves.  Large Money is beyond the definition of something as trivial as countries.....

blindman's picture

nationalism, as we knew it, was a convenient fraud hoisted
upon the illiterate to usher in globalism
and remote control of people and resources
in a way that might preclude judgments of tyranny,
illegality and illegitimacy, and, video killed the radio star.

Monty Burns's picture

It's not just the Fed.  Check out who runs all the financial (cough) 'regulatory' agencies.  You'll find they're the same ethnicity as the very ones they supposedly regulate.

Thisson's picture

Q: Is the CEO of JPMorgan Jewish?  A: No.  He is Greek Orthodox.

Q: Is the CEO of Bank of America Jewish?  A: No. He is Christian.

Q: Is the CEO of Wells Fargo Jewish?  A: No.

Q: Is the CEO of Morgan Stanley Jewish?  A: No.


So you biggoted blowhards can go fuck off.  The people running America are not one religion.  They're just a bunch of arrogant greedy pricks.  But your hateful bullshit isn't helping.

The Phallic Crusader's picture

Were you in a coma?

I advise you not to look at the heads of the verious federal agencies having to do with financial or banking oversight.  I had no idea until reading stuff here on ZH.  It really is pretty crazy, but I think has much to do with who the largest donors are to both sides of the 2 party dictatorship. 

When 3% of the population is giving half or more of the donations to the only 2 viable parties, and when that 3% is about half the millionaires and owns/manaages a very solid chunk of the news and {even more so} entertainment media - heavy influence is a given...  but it's pretty amazing that no one ever, ever talks about it.

I don't blame ZH or other blogs for wading into it - but it would be nice to see some major site or channel just come right out and talk about it.  Like many, my real concern is the way its warping our foreign policy...

Monty Burns's picture

"it's pretty amazing that no one ever, ever talks about it"

Two explanations offered:

'To establish who really rules over you, ask whom cannot be criticised'  Voltaire

'Don't hit me with the Holocau$t in my arms' Monty Burns

No major site or channel wll 'come right out and talk about it' because they'd be instantly destroyed. Simple as that. Ask Helen Thomas. Watch how everyone who even timidly raises the question (e.g. Gary Oldman) is forced, quivering, to beg forgiveness like a whipped cur.

The cosmic key to exposing the whole racket lies with the truth of 9/11 being understood by the American people.

optimator's picture

Not amazing.  If you can't talk about someone they own you.

SamAdams's picture

They worked very hard to obtain those positions in banking, congress and media.  If you had tried harder to have friends who create money out of thin-air, and perhaps changed your religion to one that sees all others as sub-human; then you too may have made the cut.  Now quit being a self-hating American....

blindman's picture


pherron2's picture

guitar is a bit out of tune, but that just adds to the charm I guess

blindman's picture

"...So, when you see someone putting on a good show, go ahead and laugh. Robin Williams wouldn't have had it any other way and neither would the kids I've mentioned.
But don't let the humor fool you!" m.l.
Life Arts 8/12/2014 at 07:51:06
Robin Williams and the Mask of Humor
By Mikhail Lyubansky

Monty Burns's picture

Agree about the guitar. Second string nearly a semi-tone flat.  How the hell was that allowed to happen?

blindman's picture

if it sounds flat it isn't loud enough.

MalteseFalcon's picture

IMHO, Fischer is running the show now.

blindman's picture

i don't think anyone is running the show, the
system of credit money runs everything. people
just compete to distort and pervert themselves
to THAT.

blindman's picture

usury is no mere cottage industry or
local scam, it has become the foundation
and a systemic essential. will it last
and carry the day?
place your bets

besnook's picture

legalized theft. of course it is not theft if it is legal to take it from you. in the real world an arrangment like ths would require a risk premium paid on your savongs account. since this is not the real world but some lsd fueled fantasyland( a fucking israeli number 2 at the central bank of the usa!wtf!) there is no argument opposing this scheme that can make sense. just hand over your money like a good little american should. say what you want about black people but they riot when things don't look right. the rest of us must like unlubricated anal sex.

DOT's picture

Law has become a trivial fiction and "legality" a semantic trick.


pherron2's picture

wow, shows how skewed my eyesight has become, I read that as "a semitic trick" at first glance, ooops


pupdog1's picture

I'll bet he played Fagin in the school production of Oliver.

Xploregon's picture

Could it be possible that if any number of TBTF banks were to require bail-ins, the FED could require smaller banks to bail-in to subsidize the larger TBTF banks if necessary?

Could a bank run from a TBTF bank(s) to a smaller bank(s) cause the (previously) smaller bank to become a target for a FED bail-in due to it's newly acquired source of bail-in funds to support TBTF bank(s)?

Your thoughts?

LawsofPhysics's picture

"Full faith and credit"- 


In a fiat world this is the only things that matters.


And once fraud is the status quo, possession is 100% of the law.

optimator's picture

Nice way to scare the Sheeple into the market.  Now I ask, would you buy a used car from those two?

JRobby's picture

I would run those two over with an unregistered used car I paid cash for.

Or just ask Tony Stewart to do it.

NidStyles's picture

Depends, are we talking '52 numbers matching Vette or some Korean pile of crap from the 80's?

Sovereign Society's picture

Unrelated but...

How do you post a blog entry!?!?  I can't figure it out for the life of me.

ebworthen's picture

You mean a regular ZH story like this one?  Special permission from Tyler(s).

You have to be a "Contributing Editor".  You can email and ask I suppose; "Contact Information" lower right of each page.