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EU Proposed Bank Wind Up Rules


Aberhound
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http://translate.googleusercontent.com/translate_c?depth=1&hl=en&ie=UTF8&prev=_t&rurl=translate.google.com&sl=de&tl=en&u=http://ec.europa.eu/internal_market/bank/docs/crisis-management/2012_eu_framework/COM_2012_280_en.pdf&usg=ALkJrhijJIDWnuLAt5vIozXX1RtxAfHvlw

 

If you want to understand why EU is in trouble read this. When these type of people come to your country telling you that your country and your neighbouring countries should form unions together read this again.

 

My summary:

 

1. Governments will create authorities who can be central banks or finance ministers or bureaucrats as they see fit.

2. The authorities will have powers to depart from normal insolvency rules with only general rules to follow always with gudance from the central EU bureaucrats.

3. The authorities will have the power to treat members of the same classes differently or to depart from the normal order of losses born by each class on insolvency subject to the difficult to interpret rules to protect the secured creditors but with the discretion to impose losses on derivative claims.

4. The assets will be valued based on current market value or long term economic value with the possibility to quickly assign values and have experts determine them later.

5. The authorities will be able to transfer assets or liabilities to new banks or to sell them to others as they see fit.

6. Access to courts will be limited. Authorities will be given 14 days to transfer assets and the courts will not be able to undo transfers. Those sufferring losses will be able to claim losses with the suggestion that they would be calculated by taking the difference between what would have been received under normal insolvency and what occurs. No mention as to who pays the damages.

7. Authorites willo have the discretion to impose losses on the deposit guarantee scheme. Reminds me of the US where companies in bankruptcy lay off their pension losses on the government guarantee scheme. Any German government agreeing to a common deposit guarantee scheme should be tarred and feathered.

8. Claims coming due in less than 30 days are supposed to be left alone. Is this a foreign bank escape clause to give them time to pull their deposits.

9. The same rules apply to investment banks.

 

So in practice after the claims of the ECB, public entities are paid out and foreign banks and billionaires who are tipped off pull their money what will be left? Why would you allow the spendthrifts who caused the government overspending which caused the bank failures through government bond write down discretion on how to wind up the banks and impose losses? Their track record is to benefit themselves and their class while impose the cost on the taxpayer. Why would we expect a different result? The claim that this is to protect the taxpayer is false as the losses will be imposed on the deposit guarantee system, the junior debt classes, the shareholders and the depositors. It makes no difference if the money comes from your left or right pocket. The end result is that almost all the money ends up in the hands of the political and bureaucratic classes and those who control them. The rules will cause the collapse of the banks. The first collapses will start in countries where depositors distrust the political class then spreading to the rest with the survivors likely only where the political and bureaucratic classes enjoy the greatest level of trust. A clear set of rules, the bankruptcy and insolvency laws, are replaced with bureaucratic discretion and uncertainty. Businesses usually require a local bank to function while most other depositors have the discretion to move the bulk of their money to safer locations. So businesses will suffer most of the losses.

 

People with deposits in Europe should review the statistics from New York as to which UN officials pay their parking tickets. On that theory you deposit the money in the Scandanavian countries and Canada.

 

Are the Canadian banks are getting ready for a collapse in Europe? I note that the Canadian banks are tightening up their rules as to who can open bank accounts. The stated reason is to prevent terrorism. No one believes this but the rules are accepted because the overriding government rule is "peace, order and good government". I can't think of any terrorist event in Canada except for 1857 in Ontario involving some freemasons, 1869 in Manitoba with some half Indians protecting their lands and 1970 in Quebec by some who wished to "liberate" Quebec.

 

HSBC now refuses to open corporate accounts for companies less than 3 years old. The Royal Bank now requires all shareholders over 10% to disclose and to attend the bank to sign. It used to be just the directors had to attend at the bank. Now if you have one director or shareholder in the bush or overseas and the other in Canada you can't have one sign and then switch places and then have the other come in to sign. You both have to attend so who can run the remote business? All banks used to allow the directors to attend branches of the same bank overseas. No longer. Now you have to fly to Canada. Lawyers used to be able to open bank accounts for clients. Now clients have to open the bank account themselves unless you set up a trust with the lawyer as trustee and then the lawyer can open up the bank account. BC allows non-resident directors and you can open a corporation within a few days then visit later to open your corporate bank account. Tax filing is simple and inexpensive if you keep the company simple.

 

I suggest all Europeans plan to vacation in Canada this summer, bring lots of ID and proof of residence like utility bills and open a bank account while you are here. Tell them you need it to pay local rent or to start a local business etc.. There are lots of foreigners living here so it is normal for foreign persons to open bank accounts. As banks get tighter you might have to figure out how to get a local address but so far you can avoid this. If you have to rent an apartment or suite in a house and get a utility bill in your name. This can be done in days. Transfer in Cdn$100,000 per account so it is CDIC insured.  People with money in tax havens might do the same.

 

Canada has the government owned natural resources to back up CDIC claims and most mortgage liabilities are held by the federal taxpayers through the CMHC.  The Canadian banks are given extraordinary advantages so are more profitable than most banks. The ultimate protection in Canada is that we remain a democracy with paper ballots. As a student I worded for Elections Canada during elections and the process is honest. Any politician who departed from the ordinary bankruptcy or insolvency rule like the EU proposes would never be elected again, nor would their party and they would be shunned socially. There is a Supreme Court of Canada case setting out clear rules how any province can leave confederation. None have chosen to do so.

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