Perfectly legal, given that our bank deposits are assets of the bank - they own the money.
A “bail-in” is a financial mechanism used to rescue a failing bank or financial institution by requiring its creditors and depositors to bear some of the losses, rather than relying on external funds like taxpayer money (a bailout). In a bail-in, the institution’s debt is restructured, and certain liabilities, such as bonds or large uninsured deposits, may be converted into equity or written off to stabilize the institution.Key Points:Purpose: Prevents collapse of a financial institution while minimizing public cost.
How it Works: Creditors (e.g., bondholders) and sometimes depositors with funds above a certain threshold (uninsured deposits) absorb losses. These funds may be converted into shares or reduced to recapitalize the bank.
Example: In 2013, Cyprus used a bail-in to address its banking crisis, where depositors with over €100,000 faced losses or had their deposits converted into bank equity.
Regulation: Bail-ins are often governed by laws like the EU’s Bank Recovery and Resolution Directive (BRRD), which prioritizes shareholders and creditors over taxpayers.
Difference from Bailout:Bailout: External funds (e.g., government money) are used to save the institution.
Bail-in: Internal funds (from creditors/depositors) are used.
I'm probably mixing apples and oranges a little, but the book "The Great Taking" by David Webb seems to cover some aspects of this. I believe he makes the case that the entire stock and bond markets are now governed by regulations which state that if the Big Boys run into serious financial trouble, they are allowed to just take everyone's portfolio. That whole $300T derivative portfolio of worthless 2008 toxic stock trash? The investment bankers can just pay it off with all of your retirement funds. Because your retirement funds don't really belong to you quite as much as you think they do. This isn't about "social security" and it isn't just about your "401K". This is about your stock portfolio managed by Fidelity Investment and others. Under certain circumstances, your money can be taken to pay off their debt.
Deposits are liabilities not assets. the banks owe the depositors. loans are assets. the borrowers owe the bank.
Not true at all, from a legal standpoint. Deposits are liabilities, loans are assets fro banks.
THEY DO NOT “OWN THE MONEY”.
THEY HAVE BEEN LICENSED TO “HOLD YOUR MONEY FOR LEGAL TRANSACTIONS”