From: TruthOut
By Ellen Brown, Web of Debt Blog | News Analysis
“As things stand, the banks are the permanent government of the country, whichever party is in power.”
– Lord Skidelsky, House of Lords, UK Parliament, 31 March 2011)
On March 20, 2014, European Union officials reached an historic agreement
to create a single agency to handle failing banks. Media attention has
focused on the agreement involving the single resolution mechanism
(SRM), a uniform system for closing failed banks. But the real story for
taxpayers and depositors is the heightened threat to their pocketbooks
of a deal that now authorizes both bailouts and “bail-ins” –
the confiscation of depositor funds. The deal involves multiple
concessions to different countries and may be illegal
under the rules of the EU Parliament; but it is being rushed through to
lock taxpayer and depositor liability into place before the dire state
of Eurozone banks is exposed.
The bail-in provisions were agreed to last summer. According to Bruno Waterfield, writing in the UK Telegraph in June 2013:
Under the deal, after 2018 bank shareholders will be first in line for assuming the losses of a failed bank before bondholders and certain large depositors. Insured deposits under £85,000 (€100,000) are exempt and, with specific exemptions, uninsured deposits of individuals and small companies are given preferred status in the bail-in pecking order for taking losses . . . Under the deal all unsecured bondholders must be hit for losses before a bank can be eligible to receive capital injections directly from the ESM, with no retrospective use of the fund before 2018.
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