Posted on 06/12/2012 3:04:26 AM PDT by AAABEST
I don't often put stories in "breaking." I post vanities even less often. Hardly anything surprises me any longer, but I find this absolutely astounding. If you follow the financial threads or the situation in Europe, you really need to read this. Actually anyone with a bank account needs to read this.
I'm going to ask the mods to leave this here, unless they really feel I'm all wet here. I don't, however, believe I am. Follow me here.
BNI (Bank Network Investments) is Italy's oldest and forth largest bank. In other words, it's a biggie.
Anyway, the bank went into receivership last November. as of late last week, without any notice whatsoever to depositors, eureka, BNI suspends all payments and withdrawals. In other words the very first European bank goes on holiday. Furious depositors are left with no way to access their money or pay their bills. They will be on "holiday" (nice term btw) until at least July.
This is quite alarming in its own right on many levels. It's not, however, what is astounding. What's astounding is that there is a total media blackout. NOT A SINGLE ENGLISH SPEAKING ONLINE PERIODICAL MENTIONS THIS. Not one. Nobody. This happened last week, and we're going into Tuesday.
Don't believe me? Here is a Google News search of the terms "BNI" and "Italy" (no quotes).
Nothing. Zero, zilch, nada. Goose egg. Really?
The story is not a hoax, it was confirmed right here on FR at this thread. An astute FReeper, (Kartographer) picked up on it and worked the translation.
It's also on the bank's own website.
The only English speaking source I've been able to find it is right here on Kartographer's barely noticed FR thread, after which I found bits and pieces on a regular (not news) Google search at some other third rate websites.
Here is a site that has several stories on the matter translated from Italian.
Again, this went down last week, today is Tuesday.
What became of those assets and liabilities? What became of the money and financial system? What happens when a govt goes out of business?
What I am trying to say is that we have a fairly recent model of what happens. There was a lot of international aid, but NOBODY wanted to put USSR back together again and NOBODY will want to put the USA back together. Various countries went in to support the individual satellite countries that were advantageous to their own country.
Nations do go “bankrupt”, even large ones and we have seen it happen in our life time, we just did not pay attention.
http://fdic.gov/news/news/press/2011/pr11066.html
FOR IMMEDIATE RELEASE
April 12, 2011
The Federal Deposit Insurance Corporation (FDIC) today updated its loss, income, and reserve ratio projections for the Deposit Insurance Fund (DIF) over the next several years. The projected cost of FDIC-insured institution failures for the five-year period from 2011 through 2015 is $21 billion, compared to estimated losses of $24 billion for banks that failed in 2010 alone. While these loss projections are subject to considerable uncertainty, under these projections and current assessment rates, the fund should become positive this year and reach 1.15 percent of estimated insured deposits in 2018.
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that the fund reserve ratio reach 1.35 percent by September 30, 2020. The FDIC anticipates that it will consider a proposal later this year to implement the requirement in Dodd-Frank that the FDIC offset the effect of increasing the reserve ratio from 1.15 percent to 1.35 percent on institutions with assets of less than $10 billion.
Following seven quarters of decline, the DIF balance has increased for four consecutive quarters. The DIF balance stood at negative $7.4 billion at year-end 2010, up from negative $8.0 billion in the prior quarter and negative $20.9 billion at the end of 2009.
“These projections and trends are indeed good news, but I want to caution that we are not out of the woods yet,” said Chairman Sheila C. Bair. “While it is difficult to make long-term projections, we think that these latest projections are a sign of continued recovery in the banking industry.”
The FDIC Board of Directors also voted to issue proposed guidelines governing assessment rate adjustments under the new large bank pricing system that went into effect beginning the second quarter of 2011. The new system is designed to better capture risk at the time the institution assumes the risk, to better differentiate risk among large insured depository institutions during periods of good economic and banking conditions based on how they would fare during periods of stress or economic downturns, and to better take into account the losses that the FDIC may incur if a large insured depository institution fails. The proposed guidelines describe how rate adjustments could be made for a limited number of institutions with risk attributes not adequately captured by the new system. The proposed guidelines will have a 45-day comment period upon publication in the Federal Register.
Did you get this folks, FDIC won't be solvent until 2018 under the best projections.
The EUSSR will go down in flames and it won’t take long...
“Did you get this folks, FDIC won’t be solvent until 2018 under the best projections.”
And what would happen in 2012 if a whole bunch of U.S. Banks went on a “Holiday”. Do you think the FDIC will cover your ATM withdrawal or auto-payed mortgage, electric, etc. bills the next day?
Well, maybe in a week.
Probably the next week.
For sure by the third week.
I mean, it wouldn’t be a whole MONTH before I could buy groceries again. Could it!?
(Note to self, pick up more canned goods tomorrow.)
If you make a $10 bet on the Cubs game, the nominal value of your derivative is over $1 billion. If you lose your bet, does your bank need to start printing money?
I think the FDIC has a line of credit with the Treasury.
It is more like going to London banker, tell them you want to make a 1 billion dollar bet on the Cubs, but you will put 10 dollars down and owe the rest if you lose. Problem if you do lose, you go to the US gov and tell them that you are about to go bankrupt and drag down the US economy unless Congress assumes the debt and dump it on the taxpayers. This is call Wall Street Banker blackmail.
But my bet is only $10, not $1 billion. And if I lose, I don’t take anyone down. Even though the nominal value is over $1 billion and I have nowhere near that in assets. Even though $1 billion is many times my family’s GDP.
“I think the FDIC has a line of credit with the Treasury.”
Hard to tell if you are being serious or if that is a joke! My point was that I think in the early days of some “minor” bank runs the FDIC will cover things, but it may take awhile to get a system up and running if it is for multiple banks.
No joke.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=anA40Xh8bco4
but it may take awhile to get a system up and running if it is for multiple banks.
It would take longer with no money.
I guess that is what I meant by a joke - that borrowing the money from the Treasury will make everything okay. My financial advisor awhile ago said something about investing in T-Bills as they are “backed by the full faith and credit of the U.S. Government”. I laughed at him.
He replied “Well, if that is gone, everything else will be gone so it really won’t matter where you keep your money.” I’m pretty sure he is wrong, but not sure what the alternatives are other than some precious metals, food, supplies, etc.
Who said that?
It will mean customers of failed banks will get their money back quickly.
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