Bail In????

Discussion in 'Wealth Creation & Management' started by slavaja, Mar 18, 2019.

  1. slavaja

    slavaja Well-Known Member Silver Stacker

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    Just wondering if anyone is aware of bail in laws in Australia? Apparently if a bank is going under the bank is allowed to take a percentage of deposits to bail out the bank. Can someone clarity that?
     
  2. SilverDJ

    SilverDJ Well-Known Member

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    Bail-in laws exist, but there is a government guarantee on bank deposits up to $250k for each account.
     
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  3. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    Correct, the bail in laws have been in place for some time but it would be a brave or a gov't with no other options to allow a bank to take deposit holders funds. If a "major" Aust bank got into trouble, the gov't would mops likely relax the "4 Pillars" rule and find that bank a dance partner to prop them up (and maybe some gov't funding too)... same as what happened in Japan 15-20 years ago.

    As for the Aust Gov't deposit guarantee, unless they have changed the rules (haven't looked at them for a few years), if you read the fine print, the Gov't will only cover deposits once the bank has been liquidated and monies paid to secured lenders and deposit holders. The Gov't will then pay any difference between what the deposit holder rec'd from the liquidator and any short fall up to what they had up to AUD250k each person per bank. In short, you can't rock up to the RBA and ask to be paid day 1 of a bank failure. Note: Liquidations of companies take time.... years...... go look at how long Annett and the HIH liquidations took and then then think how long a major Aust bank liquidation would take.... unwinding their derivative positions and arriving at a numbers would take years.

    Remember and it's been stated here in this forum before, the contents of safety deposit boxes in a bank can be claimed by a liquidator... so don't keep any PM's or other valuables in a bank safety depot box.
     
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  4. GoldenEye

    GoldenEye Well-Known Member Silver Stacker

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    The $250K government guarantee is not actually a guarantee as it's not automatic. The government needs enact this law in order for depositors to get their compensation. So the banks could take everything and depositors get nothing.
     
  5. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    On the subject of banks and whilst not Australian, have a look at Deutsche Bank. They have been in outhouse for some time and now the Germany gov't is blessing a merger with Commerzbank who aren't traveling that much better. Based on their share price EUR7.80 odd / market cap : EUR16bn there is an argument that Deutsche Bank is about to fail and the Germany Gov't / EU has to step in.

    german-bank-merger-should-send-shudders-through-global-markets-20190318-p5154j

    Deutsche Bank has an estimate derivatives position of EUR40 TRILLON and net position of EUR100 BILLION. Refer bank to my comment re market cap and share price above.

    https://realmoney.thestreet.com/inv...nk-as-the-next-black-swan-in-europe--14795851
     
  6. SilverDJ

    SilverDJ Well-Known Member

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    Do you really think the public would let the bank just take all their money and allow the government to not exact the guarantee? Seriously?
     
  7. systematic

    systematic Well-Known Member

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    The "government guarantee" is bogus ... so where do you think this "emergency" money is going to come from? Is it going to come from the bank? It uses the public's own money ... so it is about replacing public money with money from the public ...
     
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  8. sodl

    sodl Active Member

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    Bail-in update

    A few weeks ago Pauline Hanson , on behalf of Citizens Electora Council (minor political party) , introduced into the Senate.... Bank seperation/Glass-Steagall or bail-in....

    Make a submission yourself re bank seperation..... the more the better



    1 March 2019 - The CEC Report - Bank Separation or Bail-In? Make your choice known; Reregulate Dairy
     
    Last edited: Mar 18, 2019
  9. GoldenEye

    GoldenEye Well-Known Member Silver Stacker

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    I know it’s unlikely, but l’m just pointing out it’s not guaranteed.
     
  10. Shaddam IV

    Shaddam IV Well-Known Member Silver Stacker

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    And of course three years ago the banks quietly sent out letters to all term deposit holders stating that from that moment on you could not access your funds in held in a term deposit without first giving the bank 30 days notice even if you are prepared to forego your interest. You deposit money into a bank you no longer own it.
     
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  11. Timmy88

    Timmy88 Member Silver Stacker

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    They can take it before you can blink, and you will have to fight tooth and nail at a chance at getting it bank.
    Knowing that why risk it, at the very least reduce your risk.
     
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  12. sodl

    sodl Active Member

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    A cashless economy is another bail-in trap

     
  13. dragafem

    dragafem Well-Known Member Silver Stacker

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    As soon as you make a deposit those funds belong to the bank...
     
  14. systematic

    systematic Well-Known Member

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    As soon as an entry is made to a bank account the amount belongs to the bank and the account holder becomes an unsecured lender to the bank ...
     
  15. systematic

    systematic Well-Known Member

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  16. sodl

    sodl Active Member

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    The government/RBA has had it all set up for some time now.
    All it takes is a couple of key strokes on a computer and everyones deposits , investments , super , shares , safety deposit boxes etc held in all banks and financial institutions are locked down immediately. Remember Greece/Cyprus.
    It will happen whether the LNP or ALP are in power. It is the same for all countries in the world except for a few who do not have a Rothschild central bank.
    Why would anyone vote LNP or ALP
     
    Last edited: Mar 18, 2019
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  17. slavaja

    slavaja Well-Known Member Silver Stacker

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    Interesting, I was in shock when I read about bail in.
     
  18. Shaddam IV

    Shaddam IV Well-Known Member Silver Stacker

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    Pretty scary right? The degree of incompetence and outright corruption of our politicians is laid out in front of us with absolute clarity and they have this much power over our savings, the accumulated fruits of our own work and labour?
     
  19. SilverDJ

    SilverDJ Well-Known Member

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    Because the "risk" practically borders on zero.
    I'm not saying keep your life savings in cash in the bank, I agree, reduce and spread your risk, but also don't let the fear of a bail-in dominate your thinking.
     
  20. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    Remember too, that with the push of a button the Govt can close down the electronic banking system / ATM / EFTPOS.

    Just before the Dudd Gov't announced the Gov't Deposit Guarantee in mid Oct 2008, they were in panic mode early Oct 2008 as Treasury was reporting to Gov't that the level of cash being requested of the RBA by the Bank's to replenish their ATM's / bank branches was at record highs and increasing as the public were worried and pulling out additional reserves of "walking around / under the mattress cash" once the ramifications of the Lehman's failure was being felt / seen. Note: the 24 hour media cycle hyping the crap out of Lehman's, asking questions about the strength of the Aust banks helped create that sense of worry in the public domain.

    The announcement of the Gov't Deposit Guarantee did take some of the panic out of the market but withdrawal rates of cash continued to increase thru late 2008 and into 2009 before coming back to normal averages. Thankfully the gov't didn't jump the gun back in Oct 2008...but I suspect placing limits on bank withdrawals was on their list of options.

    So, to get to the end of this, the Gov't could have of then (as try could now) limit bank withdrawals to X $ per day, stop all bank withdrawals for a period etc if they felt there would be a run on the banking system etc. so as SilverDJ's says...... spread your risk and and keep some cash and other liquid assets under the mattress....
     
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