Your deposits are protected only up to the $250,000 insurance limit, and also only to the extent that the FDIC has the money to cover deposit claims or can come up with it.Įllen Brown asks, “What happens when Bank of America or JPMorganChase, which have commingled their massive derivatives casinos with their depositary arms, is propelled into bankruptcy by a major derivatives fiasco? These two banks both have deposits exceeding $1 trillion, and they both have derivatives books with notional values exceeding the GDP of the world.” The assets of the FDIC are minuscule (in the billions) compared to the valuation of outstanding derivatives (in the trillions). And don’t think that the FDIC (Federal Deposit Insurance Corporation) will save your money. The way Dodd-Frank has managed to screw things around, derivatives (bets banks have made in the Wall Street casino) have priority over your checking and savings accounts when it comes to paying off their debts.
As far as the bank is concerned, it’s an unsecured debt. Technically and legally, it becomes the property of the bank, and the bank just issues you what amounts to an IOU. When you deposit money in a checking or savings account, that money no longer belongs to you. Remember the Great Recession? It’s coming again to a bank near you. To add insult to injury – since the banks pay you zero percent on your savings account in the first place – the banks have the right to confiscate your funds if they crash the economy again as they did in 2008. Yeah, that’s right, the money to stabilize the banking sector during the next crisis will come out of your savings and checking accounts.
However, instead of taking money from the government (taxpayers), the principal has been established that the next source of money for profligate banks will be your deposit accounts. That much has been established by the lobbied to death Dodd-Frank banking reform (yeah, right) bill. There will be no more taxpayer bailouts for the Big Wall Street banks.
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