Leaked: EU Plans to Freeze Deposits to Prevent Bank Runs

Desperate Times, Desperate Measures.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

Following a spate of drastic banking interventions in Spain and Italy earlier this summer, the European Commission is preparing new legislation to prevent bank runs from completely wiping out Europe’s hordes of zombified lenders. According to an Estonian document seen by Reuters, that legislation would include measures allowing EU governments to temporarily stop people withdrawing money from their accounts, including by electronic fund transfers.

The proposal, which has been in the works since the beginning of this year, comes less than two months after a run on deposits pushed Banco Popular over the brink in Spain. In its final days, Popular was bleeding deposits at a rate of €2 billion a day on average. Much of the money was being withdrawn by institutional clients, including mega-fund BlackRock, Spain’s Social Security fund, Spanish government agencies, and city and regional councils.

The European Commission, with the support of a number of national governments, is determined that what happened to Popular does not happen to other banks. “The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge,” a source close to the German government said.

Not everyone supports the new regulatory push. Some national governments and lenders fear the legislation will have the opposite of the desired effect, hastening frantic withdrawals at the slightest rumor of a bank being in trouble. “We strongly believe that this would incentivize depositors to run from a bank at an early stage,” said Charlie Bannister of the Association for Financial Markets in Europe (AFME).

Until now legislative proposals by the European Commission aimed at strengthening supervisors’ powers to suspend withdrawals had excluded from the moratorium insured depositors (those below €100,000 euros). If the new proposal is passed, pay-outs to insured depositors could be suspended for five working days. The freeze could even be extended to a maximum of 20 days in “exceptional circumstances.”

Desperate Times, Desperate Measures

It’s not hard to see why the European Commission is so worried about the prospect of bank runs triggering disorderly bank collapses in the Eurozone. What happened to Banco Popular could happen to any number of banks in any number of Eurozone countries, including Germany where some of the regional banks (landesbank) are hanging on by the skin of their teeth. And the risk of contagion in the Eurozone is higher than ever.

Many of the problems that plagued Europe’s banks during the last financial crisis have not been resolved despite the trillions of euros conjured up to save the system by the European Central Bank. Nowhere is this more apparent than in Italy, which over the last month has tidied up two failing banks in the Venice region and the even bigger Monte dei Paschi di Siena. The deals will cut large amounts of deadwood from the sector, and have lifted confidence in what remains of it.

However, as the IMF’s country report on Italy shows, while the sector’s biggest problem, its non-performing loans, may have shrunk “marginally” in recent months they are still equivalent to a staggering 21% of GDP. As for bad loans — those that will likely never be repaid and where repossessing the collateral, if any, is the only hope of any kind of recovery — they “remained high at about €203 billion in April 2017 despite bad loan sales of about €8 billion.”

While the recent banking interventions in Italy may have briefly boosted confidence in the sector, there are clearly still massive unresolved issues. As the collapse of Banco Popular showed, it doesn’t take much to push a teetering bank over the brink: consistent bad news and rumors, spliced with falsely soothing words and an occasional untimely dose of reality from regulators, can be enough. Once the momentum gets going, it’s virtually impossible to stop.

Now, the European Commission, the same entity that wants to impose increasingly draconian limits on the use of cash in Europe, believes it can prevent bank runs that are happening via electronic transfers, and that it can thus keep banks from collapsing. Threatening to freeze depositors’ accounts is surely going to inspire a lot of confidence in these teetering banks.By Don Quijones.

As part of its QE operations, the ECB pours billions of freshly created euros each month into the bonds of Europe’s biggest corporations and the European subsidiaries of non-European transnationals. But it’s ending up with more than just a few “fallen angels.” Read…  The ECB Morphs into the Mother of All “Bad Banks”

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  104 comments for “Leaked: EU Plans to Freeze Deposits to Prevent Bank Runs

  1. kam says:

    So you have a personal liquidity problem and go to the bank to get YOUR money and the EU says you can’t have it.

    Your house is on fire and the EU says you can’t use your garden hose to knock the fire down. Then they send in the fire department to pour gas on the fire.

    Idiocy married to dictatorship will end. And not in a good way.

  2. Trd the greatest says:

    If this happens on the greatest land of United States of America, then will FDIC work?

    • Jim C says:

      haha, that is funny. Do you still believe FDIC is solvent? Transfer all your money to bitcoin and gold.

      • JMiller says:

        Jim C.,

        Sorry to disappoint you but the FDIC insurance fund is currently solvent. The insurance fund has about $80 billion in it.

        • Drew says:

          $80 billion? And how much money does a small state bank have in FDIC insured deposits that would have to be covered?

          To say nothing of TBTF Citibank or BofA? Two years ago (Source: Forbes, “Q1 2015 U.S. Banking Review: Total Deposits”, 22 May 2015) Citicorp had $1 Trillion in deposits and BofA $900 billion….

          $80 billion isn’t what it used to be.

        • JMiller says:


          It is true that the FDIC insurance fund is currently underfunded however that $80 billion would cover more than half of what the FDIC paid out for all the banks failures back in the 2008-2010 crisis. A small state bank would hardly cost the FDIC insurance fund anything.

          As far as a TBTF bank becoming insolvent. Many people think that if one big bank fails, the FDIC insurance fund would be wiped out. That is not really true. The FDIC insurance fund would not even be touched. Under the Orderly Liquidation Authority, if any bank considered to be a systemically important financial institution becomes insolvent the FDIC has stated that they would transfer all the assets of the failed bank, including the deposits, to a newly created and solvent bridge bank. This would protect the depositors and allow the customers of the bank to conduct business as usual. Since the insured deposits are now in a solvent bank there would be no need to payout anything to depositors.

          Also if the FDIC would need any money they have a line of credit with the Treasury and they have other means to raise money. So the FDIC pretty much has a blank check.

        • Drew says:


          The US Treasury won’t (literally) have two cents to its name at the end of September as its ‘extraordinary measures’ become depleted by then, so they are not able to appreciably fund FDIC (and yes, I know they get receipts every day, but Social Security, DoD et al already have their hand out, so…).

          And even assuming Congress adds $1 or $2 Trillion of increased debt ceiling, topping up the FDIC would quickly run any budget into the ground, which would no doubt be compounded by increased unemployment which would likely surround such an event. Plus $1 or $2 Trillion is on top of $20 Trillion, which for the last year of Obama was increasing at $1 Trillion annually. To boot, there are $40 – $60 Trillion in unfunded liabilities (i.e. Social Security) whose Trust Fund hits $0 in 2031 (i.e. 14 years hence). And if I’m not mistaken Congress borrowed money from SS, and likely hasn’t paid it back yet.

          The problem isn’t the FDIC. The problem is the system. In its entirety. It’s built on debt – everyone owes everyone. When one cog seizes up, the whole machine breaks down.

        • Wolf Richter says:


          But you can always print more of it if you run into trouble…

          It’s not the US Treasury debt that will blow up. The Fed can prevent that with a few clicks. See Japan on how that is done. If anything big happens, and the Fed reacts in a big way, it would be the currency that blows up.

          It already has…

          The asset price inflation in the US since QE started means that the dollar has lost 50% or 80% of its value over this period when it comes to buying assets (stocks, bonds, real estate, etc.) with the fruits of labor (wages). Think about it for a moment. That’s pretty big already – though it’s not normally talked about it in that way.

      • alex in san jose says:

        You spelled “silver and gold” wrong.

        All The Powers That Be have to do is shut down the internet and your bitcoin goes poof.

        • Frederick says:

          I agree with Alex and have therefore “missed out” on the bitcoin mania That’s OK and I’m buying more Silver while it’s on sale and still available

        • Alister says:

          Hummm….somewhere in my historical memory I seem to recall the USG making the ownership of gold illegal. When a government wants your assets they will take them….its that simple. No amount of gold, or silver, or cryptocoin will save you.

      • Slynns says:

        You’re joking about bitcoin, right? Read about the fork on August 1. No telling what will happen to value of standard bitcoin if new bitcoin currency is started. pump and dump by bitcoin jesus is possible. It’s all a casino. If you win, you are merely lucky – not smart or prudent. One reason the value has skyrocketed is because it’s been used as the currency of thieves – high demand. That can easily change.

    • JMiller says:

      Trd the greatest,

      In the U.S., banks already have the right to deny people from taking most or all of their money out of the bank temporarily. The Federal Reserve’s Regulation D allows banks and credit unions the right to require that the depositor give 7 days written notice to withdraw or transfer all or part of the balance of any savings or time deposit account. This includes savings accounts, negotiable order of withdrawal accounts (NOW), money market deposit accounts (MMDA) and certificates of deposit (CD).

      For certificate of deposits, banks normally require written notice in cases of an early withdrawal prior to the maturity date. Sometimes as much as 30 days. And even then the bank can deny your request.

      Demand deposit accounts, like checking accounts, are not subject to the 7 days written notice. However many checking accounts consist of two sub-accounts – a checking sub-account and a money market sub-account. The bank can reserve the right to require 7 days written notice prior to the withdrawal or transfer of any funds from the money market sub-account.

      Granted banks today do not require depositors give them advanced notice to withdrawal money from their account, except for CD early withdrawals, but if there is a bank run, the bank could exercise their right and require that the depositor give 7 days written notice for most accounts. And in the case of CDs, deny any early withdrawal requests.

      You ask will FDIC work. I do not know what you mean. Why would FDIC insurance not work?

      • Toyota TRD says:

        So FDIC in this case is the extra airbag in my car that I Don’t need. If we cannot touch our money ? then what the fuck is FDIC good for

        But Mr. Wolf will disagree with me

        • Frederick says:

          Why the potty mouth We get your anger without that

        • JMiller says:

          Toyota TRD,

          I understand what you are saying. FDIC insurance is good if your bank officially becomes insolvent. In the past it has been a benefit to many people when that has happened. However it does nothing for you if there is a bank holiday and you do not have access to your money.

          You make it sound as if the FDIC insurance has no value whatsoever by saying “So FDIC in this case is the extra airbag in my car that I Don’t need.” It is actual an airbag that you might be glad your car does have in a crash. But that airbag does nothing for you if your locked out of your car and can’t get in.

        • thelocalpragmatist says:

          Perhaps Mr. Richter can answer this;

          In the event of a systemically-important bank failure, and a bail-in mandate, would the insurance requirements be met by the FDIC in providing stock in the re-formulated bank (as the law currently reads) at the then value of a deposit, in lieu of cash?

        • Wolf Richter says:

          To find out what the the FDIC will do in the future, look at what it did in the past. No insured depositor has ever lost a dime or had their savings converted to bank equity or whatever, not even during the big bad financial crisis. I had deposits or CDs in three banks that the FDIC took over, including a 5.5% CD at WaMu during the Financial Crisis. The name changed over the weekend, and that was it.

          The US is not Greece or Cyprus.

          Don’t pay attention to the scaremongering. It’s a waste of time and energy.

        • TRD (king of the road) says:

          Bail-in is the right main point I have been trying to get to?

          Should we trust stock market boom, housing boom, pensions, student loans boom,tech boom?

          If everything is so safe and sound then why do websites like this, zerohedge, naked capitalism exists? People should go on vacation, read New York times, watch CNN, read people magazine

          Should I say I trust FDIC, I trust pension plan, and bond market is safe and secure.

          Best regards
          TRD (.king of the road)

        • thelocalpragmatist says:

          Mr Richter,
          Thank you for the reply. What the FDIC did in the past was in accordance with the law. The current Law, defined in the Dodd-Frank Banking Bill of 2010, allows for the scenario questioned, with unsecured depositors compensated with stock in the new entity generated by the FED to accept the toxic assets of the bank. I expect that this scenario will never come about…but am I correct in my reading of the law? I avoid scaremongering, but I do read the laws…and the minutes of the FED meeting where the bail-in provisions were discussed.

        • JMiller says:


          Never heard of unsecured depositors. There are secured and unsecured creditors. And there are insured and uninsured depositors.

          When a U.S. bank fails, insured deposits are either transferred to a solvent bank or the insured depositor gets a check. Those are the only two options.


          When it comes to the failure of a bank considered to be a important systemically financial institution, the FDIC, under the Orderly Liquidation Authority, has stated that they would resolve a big bank failure by creating a solvent bridge bank and transferring all the insured deposits to the bridge bank. This is done to protect insured depositors and allow customers to continue to do business as usual. Insured deposits therefore are not part of any bail-in. Uninsured deposits however could be.

        • thelocalpragmatist says:

          Mr. Miller,
          Thank you for your reply. My angst has been exacerbated by articles such as this;


          I expect that it is just scaremongering. I apologize. I thought that a depositor in a bank was considered an unsecured creditor.

        • Toyota,15 years old, 140000 miles says:

          Bail in is the new law, it happened in Italy, other European nations, it will happen here once fireworks starts

          Tesla can kiss my ass

        • JMiller says:


          Yes, depositors are unsecured creditors. When someone deposits money in a bank or credit union you are loaning the bank your money. There is a debtor-creditor relationship. Insured deposits, while they are unsecured, are insured. One of the FDIC mandates when a bank fails is to protect depositors and in the case of the failure of a TBTF bank, also preserve the financial stability of the U.S.

          Now is taking depositor’s money protecting them? No. And what would happen to the financial stability of the U.S. if depositor’s money was taken in a big bank bail-in? Bank runs, companies going out of business, the start of another Great Depression. Is that preserving the financial stability of the U.S.? No.

          That short Seeking Alpha article really does not tell us much. Yes, the Dodd-Frank Act does say that “creditors and shareholders will bear the losses of the financial company” but that does not include all creditors. The Dodd-Frank Act does not go into all the details about how a bail-in is done and who specifically is all part of one. One needs to look into what the Financial Stability Board says. What the BIS says. What the FDIC documents say. What FDIC speakers say. And guess what they all say. Insured deposits are not part of a bail-in. They are not Total Loss Absorbing Capacity (“TLAC”) eligible.


          “Losses should be absorbed in the first place by shareholders and then by UNSECURED and UNINSURED creditors”

          “These include the bail-in power, i.e., the power to write down and convert into equity all or parts of the firm’s UNSECURED and UNINSURED liabilities of the firm under resolution or any successor in a manner that respects the creditor hierarchy and to the extent necessary to absorb the losses. Hence, the resolution strategies that are being developed for G-SIBs provide for a recapitalisation by a way of a bail-in”


          “TLAC-eligible instruments must NOT include: insured deposits”



          “Insured deposits are protected from bail-in and so cannot count towards TLAC.”

          “Insured deposits are protected from bail-in under various national deposit insurance schemes and do not count towards TLAC”


          Everything I have read from the Financial Stability Board and from the Fed and the FDIC and a number of other sources makes it clear that insured deposits are not part of bail-ins.

          Also bail-ins in the U.S. do not make the TBTF banks whole, as the Seeking Alpha article states. If any of those banks fail, the board of the bank is replaced by the FDIC and the bank is liquidated. Hence the name “Orderly Liquidation Authority”. It is my understanding that any bail-ins would be used to help capitalize the bridge bank which the FDIC will create. Not recapitalize Citibank, JPMorgan Chase, BOA etc..

          So these people who are saying that your insured deposits could be a part of a bail-in are wrong. They like to point out that the Dodd-Frank Act says that creditors and shareholders will bear the losses of the financial company. They then say that means all creditors (when it really does not) and since a depositor is a creditor they say that means insured depositors too. Nonsense. That Seeking Alpha article is fear mongering. All that guy had to do is spend more time looking into it.

          Hope this alleviates your angst. If not you can always switch to a smaller safer bank or credit union which is where I have some of my money.

      • Trd says:

        Suppose I buy 5thousand of gold, and put it in safe deposit box at Wells Fargo. Then the banks goes under, will they confiscate my safe deposit box

        • Wolf Richter says:

          No, unless you have illegal merchandise in it. If your stash is deemed illegal, it won’t be the bank that will confiscate it, but the authorities. If gold ownership becomes illegal some day, don’t put gold in a safe deposit box.

        • X-Pat DE says:

          I believe it was during (one of the many) Greek crises, when bank/ATM withdrawals were reduced to (€40?) per day, that withdrawals from safe deposit boxes were only allowed with an official escort. If they spied you had currency, never mind real money, in the safe deposit box, then it would be tranferred to the bank and you could eke it out over a period of days/weeks/months (at the €40 rate).
          When I read that report, my wife and I bought a safe and (pretty much) emptied our safe deposit boxes.
          Possession is nine tenths of the law or if you don’t hold it, you don’t own it.

        • JMiller says:


          No, they will not confiscate your valuables that are in the safe deposit box. Currently, access to the safe deposit boxes is typically granted to the safe deposit holders the next business day after the failure of the bank.

          When can I have access to my safe deposit box?


        • fajensen says:

          What about asset forfeiture? Maybe a cop moonlighting as bank security will see the contents of your safe deposit box and have it seized so the precinct can get a new pool table or whatever?

  3. kitten lopez says:

    Don Quijones, you are killin’ it lately. (and i didn’t know your wife was La Doña, here! i thought your name was “Don” -as in Donald- i didn’t know you were The DON Quijones. nice. i like that. elegant.)

    • Don Quijones says:


      Elegant is a very nice compliment. I thank you for it.


      P.S. La Doña sends her regards ;-]

  4. Tom Welsh says:

    Banks were made for people – or so we are told.

    Yet today, the interests of the banks come first, last and foremost – the interests of the people come nowhere.

    What happened to our so-called “elected representatives” who are supposed to take care of our interests while we work to pay the taxes that support them in their luxurious lifestyles?

    • R2D2 says:

      I bet you thought you live in a democracy ? ?.

      • no_free_lunch says:

        Um, supposed to be a Constitutional Republic. You know, as in the U.S. Constitution is the governing doc.; the supreme law of the land, supporting a representative form of gov’t.? Democracy is just “tyranny of the majority”. We now have neither. We have a centrally planned, command economy as dictated by the the oligarchy/plutocracy, comrade. To paraphrase Yogi Berra, it’s “taxation without representation” all over again. Welcome to my world. Oh wait, it your world too.


        Eric ZUESSE | 17.07.2017 | WORLD
        Poll: Americans’ Massive Disapproval of Both Parties

    • Manuel Barradas says:

      “Elected representatives” are the worst kind of rats!

      Take a look what a prime minister did to the greater bank of Portugal


    • Andrew says:

      I think the whole “elected representatives” thing was a scam to get the average person to hand/give over their personal responsibility /sovereignty/decision making to someone else…Problem being that the only type of person that would WANT someone elses decision making ability would be a predator (usually charismatic, aesthetically pleasing) who would use that new found power to enrich only himself (money being a zero sum game and all)….I find very rarely do you find humble and modest people in positions where they are making decision on behalf of a large amount of others….

      These modern day “democracies” are anything but….Why in the day of the internet where we pay our taxes online, can we still note vote online?? Ask yourself how hard it would be to vote on you personal cell phone which already forces you to hand over personal info for verification anyway???…

      Would you believe Diebold, the company behind the phony Russian dossier, was also one of the companies the CIA backed as part designers/operators of the voting machines in question in the 2004 Bush Presidential Victory….Only 12 years later for the same company to be involved in intelligence gathering against a foreign power???? And this time around the voting machines where Soros owned???? Are you kidding me people, you’re okay with this!?

      • Dan Romig says:

        Where I vote, in Minneapolis Minnesota, at least we have a paper ballot that is kept after being read by a machine.

        In 2008, the Senatorial election between Republican Norm Coleman, DFL Al Franken and Independence Dean Barkley was decided by a recount that put Franken ahead of Coleman by 312 votes.

    • Frederick says:

      Made for people? Really? Perhaps but only a certain ” club” of people as George Carlin told us long ago

    • Cynic says:

      All banks started out as private enterprises, often combined with commerce and real estate speculation – dealing in wine, arms, armour, spices, wool, spices, wheat and…….. slaves.

      Public interest never came into it.

      Nothing new under the sun. :)

    • fajensen says:

      They are “elected” and “representative” all right, but, they are not elected by “us” and logically does not represent “us”. They serve whoever elected them: Their Party and The Sponsors of The Party, not “you” or “me”.

      See? We went through this procedure many times before. At first only real nobility was represented, then landed gentry, then industry, then services, then finance – with a few excursions and aberrations along the way.

      Finance is the End State. Because, the real problem with finance is that it does not actually produce anything useful to anyone outside of finance, so, a democracy / government system only representing “finance” is not sustainable in the long run. Neither politically nor financially. It will fail.

  5. BungaBunga says:

    Italians will have to revert to those old standbys: the stuffed mattress and buried canning jars in the yard. My feeling is that the bank run has already quietly begun. (One reason why we have the “war on cash!”)

    Just a brief little anecdote from the recent past: an Italian neighbor’s father died and she discovered that he had hundreds of thousands of euros worth of gold, cash, bonds and paper stock notes walled up in his house when she and her relatives started to renovate the old building. The father never breathed a word to anyone! Are we seeing a return to those days? It’s a bit like 4th century Roman Britons burying those urns (that come to light from time to time in the English countryside) full of coins when they saw the collapse coming.

    • Jarhead John says:

      My father was a depression child…When he died a few years ago, my mother accidentally found hidden coffee cans filled with currency…
      Our family has no idea how many of these “safe deposit boxes” my
      dad stashed away, because he never shared the information…The kicker is that my mother had to sell the house with no knowledge of what else was hidden or buried…

      • alex in san jose says:

        I see myself doing this.

        I save copper pennies just because they’re kinda cool. I certainly see myself saving silver coins and maybe even gold ones. The kicker is, I dabbled a tiny bit in this in the 2010-2012 time frame and found that precious metals only work out for me when I buy them far below their “street” value. Like, buying chains/jewelry at garage sales, that sort of thing.

        • Cynic says:

          I love my wood-pile.

          Not gold – far too difficult and dangerous to deal. in if the economy blows up -see real life in Argentina.

          Actually, it’s the size of a small house stacked with seasoning wood.

          I never feel apprehensive looking at it, but a bag of gold would never let me sleep.

    • Frederick says:

      YES Yes and yes No doubt about it With some it’s been that way since 2008 Why would you deposit your hard earned money in a criminal enterprise anyway? Unless your a fool

    • X-Pat DE says:

      My great-Aunt passed away last year aged 97.
      When I visited my parents, to remove my aunt’s great-granfather clock, we found it stuffed with currency.
      And that wasn’t the only place.
      Neither my gran nor any of her sisters trusted the banks.
      I always thought, as a boy, their stereotypical “old-person stashing” behaviour extremely eccentric and inviting trouble (another great-aunt’s stash in a coffee tin was, indeed, plundered).
      But they’d lived through a time of untrustworthy banks, a depression and a world war.
      It is a sobering thought that I now think of them as extremely prescient.

  6. Stein says:

    Problem with a group of bureaucrats in Brussels dictating to a disparate group of countries a policy for all. EU will ultimately disintegrate!

    • Slynns says:

      Those disparate countries weren’t complaining when their economies were booming when they switched to the euro. Countries like Greece (way worse off than Spain and Portugal) need its own currency desperately since it refuses to change its culture and generous entitlements its tax base can’t support – but it can still be part of the EU with trade agreements and doesn’t need to leave. It needs to be able to control its own inflation and will never be able to pay back the debt to EU. That is just a sick joke that they keep kicking that can down the road.

      Hating the ramped up “war on cash” I’m seeing even in US. One place I eat refuses cash now. Shouldn’t be legal to refuse legal tender.

      • Kf6vci says:

        Remember, how the ECB broke the political unrest in Greece? Those 40 € daily limit were mentioned here before. OTOH, please note WHO got bailed out. There was a 240 bn € event. But 200 bn € went to Greece’s CREDITORS.

        Next, the country was burdened with that amount. Or look at Ireland. More blackmail by the ECB. Regulators they are, too?!? Architecturally, look at their tilting tower.

        How much longer are the markets “buying” the ECB’s relelntless b.s. (pretending they can continue their stimulus ad infinitum, buying up the entire souverein bonds, then used toilet paper)? They already buy corporate bonds, too. I smell the short of a lifetime when their credibility goes up in smoke and prices plunge & yields soar.

        • fajensen says:

          “How much longer” is a long, long time. The buy side of “The Market” is the ECB buying and underwriting whatever kind of paper the sell side should care to issue, even OTC. All of this “value” is just bits on hard-drives, infinite supply and demand. Doesn’t mean anything.

          “The Markets” than matter are in the things that people need, houses, healthcare, education, food, land, …. if the ECB should somehow lose its grip on “the flows” and some of that virtual money slushes over into the real world and becomes actual money by competing with real people buying real things they need that they cannot afford suddenly yet must have – THAT is when the game ending.

          Peasants with Pitchforks is the End State.

  7. Ambrose Bierce says:

    You had me going, and then you said BLACKROCK. Clearly out national interests are at stake. Yellen coerced Citi and Chase into buying up DBs derivatives, why should she stop at a few Spanish or Italian banks? Where does the limits of off balance sheet solutions end? Answer: the Central Bank of Mars.

  8. RangerOne says:

    This is the kind of thing that is going to send the price of gold through the roof as people chose to lock up gold and cash in their home instead of a bank that can hold your money hostage to save it’s own ass. This is not a solution, I didn’t think they would want to come up with a way to make people trust banks less, but here it is.

    • Frederick says:

      Ranger I agree This will backfire on them in a big way No doubt about that

  9. Wilbur58 says:

    Since when is having a bank account the same thing as giving your money to a hedge fund? We all know how Michael Burry froze withdrawals with his fund prior to the subprime crisis. He knew what was coming while the geniuses on Wall St. thought he was both an idiot and a jerk.

    But that’s all private and a highly different product, at one’s own risk.

    What’s the point of a bank account that isn’t liquid? How creepy.

    Our bank account choices really are critical. Please, people… exercise one of the few avenues of democracy we have left and put your money in small banks, regional banks, or credit unions.

  10. Jarhead John says:

    How about those Brussels bureaucrats….They have adopted the Ferengi Rules of Acquisition as statute…Ferengi Rules of Acquisition number one–
    Once You Have Their Money, You Never Give It Back…

  11. stein says:

    Think Greece and Cyprus.

    • chip javert says:


      Now you have me thinking about two tiny (Cyprus pop <2M; Greece pop < 11M) & horribly corrupt places that have never even pretended to be able to manage their own affairs in modern times.

      Why is thinking about this good?

      • Thunderstruck says:

        “Why is thinking about this good?”

        Because it will help you to be able to wrap your head around the fact that the entire world is corrupt and unable to manage their affairs?

      • fajensen says:

        Because what “our lords and masters” did in Greece and Cyprus is prototyping what they will do “here” later; thinking about it gives one an idea of what to expect.

  12. michael w Earussi says:

    Just when you think the EU bankers can’t get any stupider this happens. These people are totally divorced from understanding the mentality of the average person.

    If I were in the EU right now I’d be converting most of my savings into gold and silver coinage and the rest in paper just for daily transactions.

    Britain should be incredibly thankful it left the EU when it did.

    • michael w Earussi says:

      We are watching the end of the European experiment. And if it ever happened here we’d be watching the end of the American one as well.

  13. Don Lee Bouska says:

    It already is happening everywhere. By international banking standards, depositors have become creditors. First in line when a crisis begins are derivative contracts, again by international standards. You are not safe in Regional or Credit Union Banks. You are still part of the Internatinal Banking Club/operationaly Membership. Buy Gold and Silver and create your own “physical” reserve bank (ASAP). God Bless us all!

    • JungleJim says:

      I’ll settle for “God Help Us All”

      One key point about gold is physical possession. The federales will try to ban privately held gold. It won’t work, but that won’t stop them from trying.

      Never, ever forget that all governments reserve the right to screw their own citizens mercilessly when the need arises, which usually means a political need. Governments are experts at rationalizing such actions with highfalutin, patriotic sounding language but the effect is the same. The sin that drives politicians wild is when the citizens try to defend themselves against their own government’s misdeeds. For that, there is no forgiveness and no punishment is too harsh.

      • Dan Romig says:


        As George Washington stated regarding the 1st Amendment: “If the freedom of speech is taken away, then dumb and silent we may be led, like sheep to the slaughter.”

        On the 2nd Amendment: “Firearms are second only to the Constitution in importance; they are the peoples’ liberty’s teeth. The very atmosphere of firearms anywhere and everywhere restrains evil interference; they deserve a place of honor with all that’s good.”

        FDR did indeed ban the ownership of gold by signing Executive Order 6102 on 5 April 1933.

    • chip javert says:


      Gold spot price down 38% in last 5 years (ignoring 5-8% buy fees + 5-8% sell fees + physical storage fees).

      Depending on how you cherry-pick the start-stop dates, gold goes up & gold goes down. So did prices of pet rocks (ok, gold is better than pet rocks).

      Even so, how many people would sit around for 5 years with a 38% loss?

      • JungleJim says:

        You think like a trader. Suppose instead that trading and short term profits were NOT the reason for acquiring the gold. What if the reason was simple lack of trust in the government ? What if the gold was simply an insurance policy that pays out in troubled times ? The problem is not the value of gold, it’s the value of the dollar and the credibility of the politicians. I made my bet, make yours.

        • thelocalpragmatist says:

          There are only a few real reasons to buy gold instead of other commodities…portability and liquidity. In a time of conflict, you may find liquidity throttled by law. Everything has value, but the liquidity of less traded items varies…as does portability…but the value of more mundane items can certainly increase, and some faster than the rise in gold.

          Liquor and narcotics

          I was once a Pawnbroker…owned pounds of gold. I have none now, but, save for narcotics, am well represented on the above list.

          As Hunter Thompson often said; “You paid for the ticket, now take the ride….”

      • Thunderstruck says:

        “Even so, how many people would sit around for 5 years with a 38% loss?”

        You never lock in the loss until you sell.

        Unlike equities, with physical PM’s you really can buy and HOLD.

    • JMiller says:


      Actually the first to get their money when a bank becomes insolvent in the U.S. is the insured depositor. Either their money (deposits) get transferred to another bank or if there is no acquiring bank the insured depositor gets paid by check within a few days.


      You said, “You are not safe in Regional or Credit Union Banks.” What you said is true. However no matter where you have your money or what you have your money in, it is not safe, meaning without risk. Even owning gold and silver is not safe.

      • Cynic says:

        People will torture you and your family to death for gold: see the Dark Ages, see 21st c Argentina.

        One man died for the sake of two gold coins hidden in a flower pot.

        In a serious collapse, the nastiest people come out of the woodwork, and if the police haven’t been paid regularly, they help them……prosecution-free crime, a good business to be in!

        • alex in san jose says:

          Yep the “survivalist” nutbags. I’ve been around ’em and wow. I’ll take my chances in the big city, thankyouverymuch. These people really do sit around thinking over which neighbors to shoot right away and which ones to shoot later.

    • Frederick says:

      You are sounding like Michael Pento, Peter Schiff and Max Keiser Become your own central bank Get real money Au and Ag and starve the central banking cabal into irrelevancy now friends Couldn’t agree more with Mr Bouska

  14. Stevedcfc72 says:

    This report from Reuters will make a lot of people just draw their money out of the bank once there’s a whiff of trouble.

    A lot of the Italian Banks are reporting their second quarter financials this week, should make interesting reading.

    Monte Dei Paschi were supposed to deliver figures on Friday 28th July but have delayed it. I don’t think they’ve quite worked out what loss figure to put in the accounts yet.

  15. Julian says:

    fwiw this is just a proposal. The time to get your panties in a bunch is when it passes

    • michael w Earussi says:

      By the time it passes it will be too late.

      • Frederick says:

        Exactly Michael You understand Like Pelosi with Obamacare “We need to pass it to see what’s in it”

        • Lindsay Berge says:

          A fuller quote to be fair:
          “You’ve heard about the controversies within the bill, the process about the bill, one or the other. But I don’t know if you have heard that it is legislation for the future, not just about health care for America, but about a healthier America, where preventive care is not something that you have to pay a deductible for or out of pocket. Prevention, prevention, prevention—it’s about diet, not diabetes. It’s going to be very, very exciting. But we have to pass the bill so that you can find out what is in it, away from the fog of the controversy.”

    • JMiller says:


      You are correct. It is currently just a proposal. However in the U.S., banks already have the right to deny people from taking most or all of their money out of the bank temporarily. The Federal Reserve’s Regulation D allows banks and credit unions the right to require that the depositor give 7 days written notice to withdraw or transfer all or part of the balance of any savings or time deposit account. This includes savings accounts, negotiable order of withdrawal accounts (NOW), money market deposit accounts (MMDA) and certificates of deposit (CD).

      For certificate of deposits, banks normally require written notice in cases of an early withdrawal prior to the maturity date. Sometimes as much as 30 days. And even then the bank can deny your request.

      Demand deposit accounts, such as checking accounts, are not subject to the 7 days written notice. However many checking accounts consist of two sub-accounts – a checking sub-account and a money market sub-account. The bank has the right to require 7 days written notice prior to the withdrawal or transfer of any funds from the money market sub-account.

      Granted banks today do not require depositors give them advanced notice to withdrawal money from their account, except for CD early withdrawals, but if there is a bank run, the banks could exercise their right and require that the depositor give 7 days written notice for most accounts. And in the case of CDs, deny any early withdrawal requests.

  16. Rates says:

    LOL, the EU is soooooo behind. In Murica, we shove sh*t like unwanted Auto stuff into people’s accounts and the customers don’t even know it and the rest are still staying!!!

    This thing does not even merit an article.

  17. houtskool says:

    Its not the banks, its the system. You, me, everybody. Growth through debt, first slowly, then suddenly. Bankruns cause systemic collapse if done appropriately. So you don’t get your money out because you’re a part of the matrix. Its not your ‘money’, its your finger in the soup, when everyone pulls his/her finger, the meatballs cannot float.

    We’re in way to deep. Its systemic now due to mass financialization of the real economy. The real economy simply cannot carry all false promises. You can whine, but they WILL keep your finger in the soup.

    You could still buy some tangible assets with your left hand though. Try it before the other hand is forced too.

    • chip javert says:

      Never heard the floating meatball soup financial analysis. I love it. I’m taking it and making it my own.

      Might even start it with “My grand-daddy used to say…”.

    • Gershon says:

      In a time of universal fraud, possession is 9/10s of the law.

    • Frederick says:

      I’m in Warsaw now on my annual trip to do with my rental property here and as soon as I get back to Istanbul I will be taking my years rent proceeds straight to the ancient covered bazaar and buy some silver Everyone should be doing the same and together we can end the criminality of central bankers and fiat money printing permanently God willing

  18. tony says:

    george orwell 1984 here and gone but just childs play to now. The cabal or the 500 as i like to call them are at about 90% world take over of everything. The non thinking grey race is just about here.

  19. michael Engel says:

    There is an Iron Men race in Barcelona, a test of will and endurance, at the end of Sep/Oct.
    Is anybody in Europe prepared for that event.

    • Frederick says:

      Funny you mention that I just met a lieutenant colonel in the marines in Istanbul on his way to Warsaw from Kabul for some RnR and he will be there I showed him around the city here and today he’s heading back Good guy but he is stuck in the swamp I did my very best to awaken some critical thinking in him The weather, the beer and the girls sure are great here

    • Cynic says:

      Who needs a race?

      We Spaniards have been enduring all kinds of crap for centuries. :)

  20. Gershon says:

    Rather than admit the systemic risks to the financial system created by their mad, failed Keynesian experiments, our central planners and central bankers are preparing to double down on their frauds and swindles against savers and taxpayers.

  21. JB says:

    people are placing large cash stashes in their home safes . And why ? well for the Japanese it is negative interest rates (I.e where the bank charges you to deposit money) .

    • Frederick says:

      In Turkey I get 10 percent on Lira accounts and 2.3 on USD accounts but I keep 30 percent in cash under the mattress just in case Youlose the income but boy do you sleep well

  22. william says:

    I once told my parents, in their 70s, that debit card fraudulent withdrawals may not be reversed as are credit card fraudulent charges – and that the banks may not help them. They said ‘oh no, the people at the bank are really nice.’ So, there it is.

  23. michael Engel says:

    The European are complacent after the election in France + Holland.
    In late Sep/Oct, within 2 month, two torturous event will take place :
    two Iron man endurance test for the people of Catalonia
    ====> Catalonia referendum + Iron man race.
    Both require a lot of preparation ahead of time. Europe is not ready.
    A possible divorce will send new tremors !!

  24. Cynic says:

    If you want to have some gold to sell in a crisis, get wedding rings -then you can pull the ‘I can’t bear to part with this but I have to….’ spiel.

    And go to different people to sell.

    Remember, those buying in a major crisis will probably be criminals, and will track you home if they think you might have more.

    Silver, too. But lovely gold dollars and sovereigns are worth killing you for. If you sell those, go to a major dealer and pay the taxes on the sale.

    But even they may well be corrupt if things are bad enough -employees selling your details to the crooks……

  25. Don L. Bouska says:

    JMiller, you are only partially correct regarding the depositor’s success in receiving and/or the bank’s ability in returning “insured deposits”. Yes, the regulatory language on the books sound fine when stressing under occassional hiccups. But surely you see the broader picture of the financial times that are upon us. The derivatives contracts that total well over 1.5 quadrillion (that are first in line) coupled with FDIC Reserves of 40-50 billion against 6 trillion in “insured deposits” do not pass the smell tests of ones probability of getting ones money back. The issue is the size of the problem not that there are or are not regulations in place. I would not want to be waiting in that very long line and expect to get any currency of value returned at that point. I would rather be gaurding my own metals with gunpowder resources…… Good luck with your choice of thinking it all ends well due to regulations and we sing cum ba ya! Respectively speaking of course, I never want to see a brother kept from his well earned currency.

    • JMiller says:


      Derivatives are first in line for what? Are you talking about how derivatives have “super-priority” status in bankruptcy and their claims get paid first? If so, that may be true but the fact is insured depositor get their money even before that.

      Here is how it works. When a bank fails and there is no acquiring bank, the FDIC mails insured depositors a check, within a few days of the bank closing. So the insured depositor gets paid first by the FDIC insurance fund before any one else gets paid from the assets of the bank. The insured depositor never has to file a claim or stand in line in the bankruptcy process to get their money. Instead the FDIC insurance fund stands in the insured depositor’s place as an unsecured creditor in the bankruptcy process. The insured depositor has already received their money while all the creditors, including derivatives and uninsured depositors, have to file a claim and wait.

      Every thing I said in my previous post to you is true. You just do not like it.

  26. Don Bouska says:


    What I do not appreciate, or like, are the standard replies of those who think that all is well in terms of debt generally within the “Global Banking System” and/or in the “shadow banking” world of derivatives.
    You most likely have many mis-guided assumptions built into your standard model processes that have not been factored within a financial meltdown. In other words, when the derivatives begin to crash, say for example on interest rates alone which is where most are held, the entire system could be brought down. For me, I do not like the odds of waiting for a good check that can be successfully cashed while you have a ponzi scheme of epic porportions never seen before on the face of this planet happening around the world. In 2008, the largest Insurance Company in the world could not cover their Insurer’s loses which, if not bailed out by the taxpayers, would have brought the entire system down in 24-48 hours. Given current International Regulations, bail outs and/or bail-ins are a joke when considering the comprehensive spider web and amount of financial obligations at hand.
    I have had the fortunate opportunity to have become my own bank outside the “system”. What I do and will contiunue to like, are my odds over your under assumed financial model processes that appear well mannered and packaged. Further, what I do not like are casual attitudes playing with life savings and personal devastation. That’s even ignorant for gamblers!!

    • JMiller says:


      I never said nor meant to imply that all is well. I know all about the massive amount of derivatives, the majority being interest rate swaps, and the potential dangers with some banks having such a large amount. And I agree when the derivatives begin to crash the entire system COULD be brought down. Could it all happen in 5 minutes? No. In 5 hours? No. In 5 days? Perhaps, that is if everything that could go wrong did. More than likely it would transpire over the course of several weeks or months because of the tools available to the regulators which would at least slow down any collapse. So I do not believe in the scenario of a complete collapse of the financial system happening over a weekend has any real chance of happening.

      As an insured depositor I am not the least worried about bail-ins or the FDIC getting the funds to pay off insured depositors if it even came to that. The main risk for most people who have money in a bank or credit union is dollar devaluation, hyperinflation, or things that would prevent you from accessing your money such as the grid going down because of an EMP attack or a cyber attack on your bank. Or may be capital controls being put in place because of bank runs.

      BTW, I do have about 35% in physical precious metals.

  27. d says:

    People who have been saying since before the end of the last millennium, that banks or bank controlled safe deposit areas, are no longer the places to store valuables or hold excess liquidity/savings as states were going to start doing things like those in the article and bank depositors are in fact just unsecured creditors in this new banking order.

    Are of course mad and not to be listened to.

    • JMiller says:


      Insured depositors are not just unsecured creditors. They are the most protected entity in the banking system. No insured depositor has ever lost a penny in the U.S. The same can’t be said of stockholders, bondholders, uninsured depositors and even derivative creditors. Insured depositors get paid first when a bank becomes insolvent before any other party.

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