Bank Bail-Ins, a legal strategy allowing banks to seize your deposits in times of financial crisis. Drawing on real-world examples from Cyprus and Lebanon, Taylor Kenney uncovers how this little-known law is poised to strip ordinary citizens of their savings, should banks falter, and how to protect yourself from this looming economic threat.

TRANSCRIPT:

When you deposit funds into your bank account, did you know that you are agreeing the bank can take your deposits to recoup their losses if need be? Welcome to the world of bank bail-ins. Unlike bailouts funded by government debt and taxpayer money, bail-ins freeze depositor accounts and take your funds directly from you. This bail-in strategy has already taken billions from depositors around the world.

And before you say, well, that will never happen in the United States, guess what? It has already been signed into law here and therefore is ready to be utilized when the moment is right. And given just how vulnerable banks are right now, sitting on the brink of failure thanks to massive unrealized losses, we need to understand the risks that we’re up against so that we can prepare ourselves because we can’t trust those in power to do it.

The FDIC, the Federal Deposit Insurance Corporation, the people who are supposed to protect us, are sitting around right now in a room laughing at us as they hide the truth about bank bail-ins and mock the American people for having faith in the banking system as a whole.

While many might assume a bank’s purpose is to store funds safely and loan out capital to those who can pay it back for the good of the American people, the harsh reality is that at the end of the day, banks are privately owned, for-profit businesses who will do everything they can to maximize shareholder profit. This includes high-risk lending and papering over losses to boost payouts.

Now, in theory, these same stockholders should be the ones who bear the burden of any financial losses. But you and I both know the select elite, the few who own the banks, they’re not going to let that happen. We saw the too big to fail playbook in action in 2008. Everyone in power acted shocked. How could this have happened?

Something has to be done. But ultimately, the government intervened at the expense of the American people. No one who was responsible was actually punished. And they made sure that next time there was a plan in place, a plan to take your deposits. In 2010, the United States passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. I’ve just got to pause.

The Wall Street Reform, the Consumer Protection Act, you got all of those titles, right? In this law, they clearly outline how failing financial institutions, aka your bank, are legally allowed to bail you in, to take your deposits to make themselves whole. If their failure represents a systemic threat to the system. So if the house of cards collapses again, and this time the lender of last resort, the Federal Reserve, can’t intervene.

Well, we know exactly what they’re going to do. And while it hasn’t happened yet in the United States, we can look at what’s happened in other countries to understand the three steps of a bank bail-in. Step one, remove access. Almost all bail-ins have occurred in a country that was struggling with inflation and record-breaking government debt. Sound familiar?

In 2020, Lebanon was struggling with this exact situation, and it became clear that the financial pressure was creating a situation where it was only a matter of time before their entire banking sector collapsed. To avoid widespread bank failure at a time when the government couldn’t afford to bail out the banks, they simply froze everyone’s accounts. Overnight access was restricted.

ATMs were shut down, and people were left without their funds. And this wasn’t just for a day or a week. This was for the next two years. This two-year window bought the government and big banks time to decide what they were going to do next. Which brings us to step two, deposit seizure. Once the government has restricted access to your funds, they then decide how much they’re going to take.

Often this decision-making process takes time because it’s done in collaboration with the IMF, the International Monetary Fund, or other world powers who will only agree to help if a bail-in is part of the conversation. In Cyprus in 2013, two of the country’s largest banks collapsed. The first one, Laiki Bank, was wound down completely, which means that they took 100% of deposits to make themselves whole, leaving their depositors with nothing.

The second bank, the Bank of Cyprus, was much more generous, deciding that anyone who had over $100,000, they would take a measly 47.5%. Imagine that overnight, half of your savings are gone. As with all bail-ins, it’s the savers, the responsible ones who get punished. While the central banks, the ones who racked up massive balance sheet losses, are the ones who maintain their position of power.

And the same thing happened in Lebanon. The people in power, the central banks, they weren’t punished. No, it was the depositors who had to pick up the bill for half of the economic meltdown through the seizure of their deposits. And as if the theft of your deposits isn’t bad enough already, the final nail in the coffin is step three, devaluation. In Lebanon following the bail-in.

The government turned around and devalued the currency by 90%. Why? Because they can. A fiat currency doesn’t have any intrinsic value, which means that the government can determine its value however they see fit, regardless of the devastation that it causes the people. Imagine having half of your deposits taken, and then whatever you have left be devalued by 90%, losing almost all your purchasing power.

A 90% devaluation means that you can almost just tack a zero onto the end of your monthly expenses. If right now your monthly expenses are $5,000, imagine them being $50,000. That’s the scale of what we’re talking about. This bail-in process is done in the name of the greater good of keeping the economy afloat. But what ultimately happens in Spain, Greece, and Portugal, in any of these countries that have enacted a bail-in?

It’s the people in power who are fine, and it’s the everyday citizens who are left with nothing. If you’re upset by all of this, you should be. It’s legal theft, and it’s a perfect example of how the entire system is based on monopoly money. It’s not real. You could sit there all day and say, they can’t do this.

Yes, they can. They can freeze your accounts. They can take your deposits. They can change the value of your dollar because none of it is real money. The only way to protect yourself is to ensure that you’re not keeping your savings, your wealth, in a currency such as the US dollar that they control. We have got to stay focused on what is happening and what is coming next.

So that we can prepare and create a plan now. Because I don’t know about you, but I can’t imagine not having access to my funds for two years. And then when I finally get access back, my funds are gone? Now, as scary as all of this is, I personally am able to sleep at night because I know I have a plan in place.

I am protected with physical gold and silver, something that they can’t freeze, they can’t take, they can’t control. I am in control of it because I hold it and therefore I own it. If you don’t hold it, you don’t own it. And my wish, of course, is that everyone feels that same way, that everyone has a plan in place so that no matter when something happens, we are protected and we are ready for what’s coming next.

A lot of people aren’t aware of these threats, so if you know someone who would benefit from watching this video, please be sure to like, subscribe, and send it to them. It helps us get the word out. And as you all know, I truly believe that education is crucial in this fight that we’re up against. Does any of this surprise you?

How close do you think we are? Tell me your thoughts in the comments below. As always, I appreciate you being here. My name is Taylor Kenney with ITM Trading, your trusted source for all things gold, silver, and lifelong wealth protection. Until next time.

SOURCES:

https://fortune.com/recommends/banking/what-is-a-bail-in/

https://www.businessinsider.com/63-problem-banks-517-billion-unrealized-losses-fdic-interest-rates-2024-6

https://www.fdic.gov/news/speeches/fdic-quarterly-banking-profile-first-quarter-2024

https://www.usatoday.com/story/money/business/2013/07/29/bank-of-cyprus-depositors-lose-savings/2595837/

https://www.telegraph.co.uk/finance/financialcrisis/10024209/Bank-of-Cyprus-executes-depositor-bail-in.html

https://www.reuters.com/markets/rates-bonds/lebanons-savers-bear-burden-under-new-rescue-plan-2022-02-02

https://www.reuters.com/markets/currencies/lebanon-devalue-currency-by-90-feb-1-cbank-chief-says-2023-01-31