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     Apr 1, '14

'Bail-in' deal raises risk to bank deposits
By Ellen Brown

On March 20, 2014, European Union officials reached an historic agreement to create a single agency to handle failing banks. Media attention has focused on the agreement involving the single resolution mechanism (SRM), a uniform system for closing failed banks. But the real story for taxpayers and depositors is the heightened threat to their pocketbooks of a deal that now authorizes both bailouts and "bail-ins" - the confiscation of depositor funds.

The deal involves multiple concessions to different countries and may be illegal under the rules of the European Parliament, but it is being rushed through to lock taxpayer and depositor liability into

place before the dire state of eurozone banks is exposed.

The bail-in provisions were agreed to last summer. According to Bruno Waterfield, writing in the UK's Telegraph in June 2013:
Under the deal, after 2018 bank shareholders will be first in line for assuming the losses of a failed bank before bondholders and certain large depositors. Insured deposits under 85,000 pounds sterling (US$142,000, or 100,000 euros) are exempt and, with specific exemptions, uninsured deposits of individuals and small companies are given preferred status in the bail-in pecking order for taking losses... Under the deal all unsecured bondholders must be hit for losses before a bank can be eligible to receive capital injections directly from the ESM [European Stability Mechanism], with no retrospective use of the fund before 2018.
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Ellen Brown is an attorney and president of the Public Banking Institute, PublicBankingInstitute.org. In Web of Debt, her latest of 12 books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are webofdebt.com and ellenbrown.com.

(Copyright 2014 Ellen Brown)




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