Introducing the Bank Bail In: It can cost you, dearly:
Banks are planning to confiscate YOUR money, says many
The Big Short, a 2015 drama movie has become one of my new favorites. In the movie, which is based on the very real banking crash of 2008, where the Government (or middle class) taxpayers baled the banks out, Hedge fund manager Michael Burry bet against the banks in the tune of (more than) $1 billion of his investors money. Guess what – he won! Big time.
Unfortunately, banks (including Lehman Brothers) went into default (because of their heavy investments in mortgage backed securities (risky derivatives) and had to rely on Uncle Sam (or the middle class taxpayer) for a bailout. The fallout from this disaster was far and wide. Plus, there was no shortage of fingers being pointed.
Such risks shouldn’t happen again, right? That’s what just about any logical person would think. While most of the country focuses on massive problems which include transgender bathrooms, there have been some new and interesting measures taken to stop such a terrible bailout from happening again.
The new plan is called a Bail In – this is when the banks can do as they please, but when they get in trouble again they just take your money and give you “shares” in exchange.
Granted, the literature explaining how this works can be a tad confusing – but the plan is simple. The FDIC doesn’t seem to excited to pay the banks up to $250k for using your (depositors’) money (also called unsecured debt) when they confiscate it to pay off their secure creditors (when their risky investments go wrong) to pay other banks back. Instead of your money, you will get ‘shares’ in a basically insolvent bank and both the FDIC and the bank who (basically stole) used your money for their debts are happy and off the hook!
Anger and disbelief were my knee-jerk reactions when I learned of theses sinister plans. However, it doesn’t surprise me. Not even a little. So, rather than being mad, I chose to do some digging. There are plenty of places you too can look, if so inclined. There are also many other places – much safer than risky banks – to park or invest you money that an honest person can still find safety and solace.
If you’re anything like me when it comes to money, I’ll bet you’re curious to learn more. Well then, here’s some additional reading – some of it straight from the horse’s mouth: