The Bank of England (BOE) and the U.S. Federal Deposit Insurance Corporation (FDIC) jointly authored a paper published on Dec. 10, 2012, titled "Resolving Globally Active, Systemically Important, Financial Institutions." Largely unnoticed at the time, the 15-page document has come into focus over the last 48 hours as a critical planning document by the British Empire's financial hit-men, which strategizes over how to save their hopelessly bankrupt trans-Atlantic financial system from the onrushing meltdown, including by stealing assets from depositors — in exactly the fashion that has just occurred in Cyprus and is spreading elsewhere — and leaving populations to scrounge in the rubble for their simple existence.
The report couches the discussion in terms of making "unsecured creditors" take the hit for bailing out the banks, and remains carefully ambiguous as to whether or not that includes depositors in those banks. But events now rapidly unfolding internationally, make it crystal clear that what is meant by "unsecured creditors" can in fact become depositors in those benighted, bankrupt banks. And it will not only be Cypriots, Spaniards and Italians that will be left to starve in order to bail out the banks; the same policy is planned for the United Kingdom, Canada, and the United States as well. It is coming soon to a bank near you!
The question that must now be posed, Lyndon LaRouche stated today, is: How many members of the U.S. Congress are aware of this swindle, and are not supporting Glass-Steagall, knowing this?
Lyndon LaRouche warned you about the precise policy that is outlined in the BOE-FDIC plan — and explained why only Glass-Steagall is a viable alternative — in an explosive Feb. 15, 2013 webcast, where he forecast:
"The vast mass of debt, which is represented by the monetarist operation, would be cancelled. In its place, they would have a new system of finances, which ignores entirely all the obligations associated with the old! Which would mean that most of the people of the world would be starving to death, quickly. . . I know exactly what they're doing, because I know how systems work. And what they're doing, the only way it will work, is to cancel the entire bailout system—just wipe it off the plate, and come in with a new system, in which people who are privileged will be brought into that system, and they will be given relatively good incomes to live on, but unfortunately the greater majority of the population will have none. This is the greatest population-reduction scheme so far in known history. And that's what the policy of the people who oppose Glass-Steagall is—whether they themselves know it or not. But they will be held accountable for the effect of that policy."
In light of that LaRouche warning, and unfolding events on the ground, the BOE-FDIC planning document has four policy points which should be emphasized:
1) In the event of a meltdown of a Globally Active, Systemically Important Financial Institution (G-SIFI), "shareholders would lose all value and unsecured creditors should thus expect that their claims would be written down to reflect any losses that shareholders did not cover." As a March 29 posting on the blog "Random Thoughts" put it: "The $64 trillion question is who are the 'unsecured creditors'? If they are depositors over the guaranteed limits, expect corporations and individuals to park their money elsewhere."
2) The proposed "top-down" resolution (i.e. bankruptcy reorganization) of G-SIFIs, by a combined UK-US approach, will lead to "smaller, more manageable — and perhaps more profitable" financial institutions. Ring-fencing in the U.K. will be very helpful to bring this about, they say, asserting — absurdly — that this will prevent the derivatives bubble from blowing up in their face.
3) The Bank of England takes over regulatory authority of all banking in the U.K. from the Financial Services Authority (FSA), this coming Monday, April 1, 2013. Under the existing British Banking Act, the FSA does not cover "non-deposit-taking financial firms, notably investment banks and financial market infrastructures." But as of April 1, the new Prudential Regulation Authority, a subsidiary of the Bank of England, will. This is essential if their proposed policy is to go operational.
4) The BOE-FDIC report says that the December 2012 study is just the first step, and that they will have detailed plans in place by the end of 2013 for each and every G-SIFI — which are all the principal international banks in the world.
This policy is already being implemented, at breakneck speed:
* Cyprus: Cypriot authorities announced on March 30 that depositors holding over 100,000 euros in the country's major banks, are going to be hit much harder than the 40% write-down originally reported. Rather, 37.5% of their holdings will be forcibly converted into common stock in the Bank of Cyprus ("Congratulations; you are now a proud owner of a bankrupt bank"). An additional 22.5% of their deposits won't even earn interest, let alone be returned; and 40% will accrue interest, but also won't be returned, unless "the bank does well."
* European Union: Cyprus is the "template" for all of Europe, Jeroen Dijsselbloem, the new President of the Eurogroup stated on March 25. He was seconded on March 28 by European Central Bank Governing Council member Klaas Knot: "This approach will be part of the European liquidation policy." On March 29, Swiss MEP Gunnar Hokmark added: "You need to be able to do the bail-in as well with deposits," amid press reports that specific legislation to this effect will soon be presented to the Euro Parliament.
* Spain: One million Spanish households were swindled into using their deposits to buy "preferred stocks" (preferentes) in most major Spanish banks. As in the case of bankrupt Bankia, those stocks are now worth less than 1% of their original value. According to the blog "Slog," the British subsidiary of the Spain's leading bank, Santander, has just informed its depositors that their money will now be held in its capacity as a bank, and not as a trustee, ie that Santander can attach it at will.
* Canada: The Hellasfrappe blog reports that Canada's "Economic Action Plan 2013" suggests that banks can be recapitalized by converting certain liabilities, including deposits, into regulatory capital.
To reiterate LaRouche's point: The question that must now be posed, is: How many members of the U.S. Congress are aware of this swindle, and are not supporting Glass-Steagall, knowing this?