I challenge anyone to prove me wrong that confiscation of bank deposits is legalized daylight robbery
Bank depositors in the UK and USA may think that their bank
deposits would not be confiscated as they are insured and no government
would dare embark on such a drastic action to bail out insolvent banks.
Before I explain why confiscation of bank deposits in the UK and US
is a certainty and absolutely legal, I need all readers of this article
to do the following:
Ask your local police, sheriffs, lawyers, judges the following questions:
1) If I place my money with a lawyer as a
stake-holder and he uses the money without my consent, has the lawyer
committed a crime?
2) If I store a bushel of wheat or cotton
in a warehouse and the owner of the warehouse sold my wheat/cotton
without my consent or authority, has the warehouse owner committed a
crime?
3) If I place monies with my broker
(stock or commodity) and the broker uses my monies for other purposes
and or contrary to my instructions, has the broker committed a crime?
I am confident that the answer to the above questions is a Yes!
However, for the purposes of this article, I would like to first
highlight the situation of the deposit / storage of wheat with a
warehouse owner in relation to the deposit of money / storage with a
banker.
First, you will notice that all wheat is the same i.e. the wheat in
one bushel is no different from the wheat in another bushel. Likewise
with cotton, it is indistinguishable. The deposit of a bushel of wheat
with the warehouse owner in law constitutes a bailment. Ownership of the
bushel of wheat remains with you and there is no transfer of ownership
at all to the warehouse owner.
And as stated above, if the owner sells the bushel of wheat without
your consent or authority, he has committed a crime as well as having
committed a civil wrong (a tort) of conversion – converting your
property to his own use and he can be sued.
Let me use another analogy. If a cashier in a supermarket removes
$100 from the till on Friday to have a frolic on Saturday, he has
committed theft, even though he may replace the $100 on Monday without
the knowledge of the owner / manager of the supermarket. The $100 the
cashier stole on Friday is also indistinguishable from the $100 he put
back in the till on Monday. In both situations – the wheat in the
warehouse and the $100 dollar bill in the till, which have been
unlawfully misappropriated would constitute a crime.
Keep this principle and issue at the back of your mind.
Now we shall proceed with the money that you have deposited with your banker.
I am sure that most of you have little or no knowledge about banking, specifically fractional reserve banking.
Since you were a little kid, your parents have encouraged you to save
some money to instil in you the good habit of money management.
And when you grew up and got married, you in turn instilled the same
discipline in your children. Your faith in the integrity of the bank is
almost absolute. Your money in the bank would earn an interest income.
And when you want your money back, all you needed to do is to
withdraw the money together with the accumulated interest. Never for a
moment did you think that you had transferred ownership of your money to
the bank. Your belief was grounded in like manner as the owner of the
bushel of wheat stored in the warehouse.
However, this belief is and has always been a lie. You were led to
believe this lie because of savvy advertisements by the banks and
government assurances that your money is safe and is protected by
deposit insurance.
But, the insurance does not cover all the monies that you have
deposited in the bank, but to a limited amount e.g. $250,000 in the US
by the Federal Deposit Insurance Corporation (FDIC), Germany €100,000,
UK £85,000 etc.
But, unlike the owner of the bushel of wheat who has deposited the
wheat with the warehouse owner, your ownership of the monies that you
have deposited with the bank is transferred to the bank and all you have
is the right to demand its repayment. And, if the bank fails to repay
your monies (e.g. $100), your only remedy is to sue the bank and if the
bank is insolvent you get nothing.
You may recover some of your money if your deposit is covered by an
insurance scheme as referred to earlier but in a fixed amount. But,
there is a catch here. Most insurance schemes whether backed by the
government or not do not have sufficient monies to cover all the
deposits in the banking system.
So, in the worst case scenario – a systemic collapse, there is no way for you to get your money back.
In fact, and as illustrated in the Cyprus banking fiasco, the
authorities went to the extent of confiscating your deposits to pay the
banks’ creditors. When that happened, ordinary citizens and financial
analysts cried out that such confiscation was daylight robbery. But, is
it?
Surprise, surprise!
It will come as a shock to all of you to know that such daylight
robbery is perfectly legal and this has been so for hundreds of years.
Let me explain.
The reason is that unlike the owner of the bushel of wheat whose
ownership of the wheat WAS NEVER TRANSFERRED to the warehouse owner when
the same was deposited, the moment you deposited your money with the
bank, the ownership is transferred to the bank.
Your status is that of A CREDITOR TO THE BANK and the BANK IS IN LAW A
DEBTOR to you. You are deemed to have “lent” your money to the bank for
the bank to apply to its banking business (even to gamble in the
biggest casino in the world – the global derivatives casino).
You have become a creditor, AN UNSECURED CREDITOR. Therefore, by law,
in the insolvency of a bank, you as an unsecured creditor stand last in
the queue of creditors to be paid out of any funds and or assets which
the bank has to pay its creditors. The secured creditors are always
first in line to be paid. It is only after secured creditors have been
paid and there are still some funds left (usually, not much, more often
zilch!) that unsecured creditors are paid and the sums pro-rated among
all the unsecured creditors.
This is the truth, the whole truth and nothing but the truth.
The law has been in existence for hundreds of years and was
established in England by the House of Lords in the case Foley v Hill in
1848.
When a customer deposits money with his banker, the relationship that
arises is one of creditor and debtor, with the banker liable to repay
the money deposited when demanded by the customer.
Once money has been paid to the banker, it belongs to the banker and he is free to use the money for his own purpose.
I will now quote the relevant portion of the judgment of
the House of Lords handed down by Lord Cottenham, the Lord Chancellor. He stated thus:
“Money when paid into a bank, ceases altogether to be the money of the principal… it is then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it.
The money paid into the banker’s, is
money known by the principal to be placed there for the purpose of being
under the control of the banker; it is then the banker’s money;
he is known to deal with it as his own; he makes what profit of it he
can, which profit he retains himself,…
The money placed in the custody of the
banker is, to all intent and purposes, the money of the banker, to do
with it as he pleases;
he is guilty of no breach of trust in
employing it; he is not answerable TO THE PRINCIPAL IF HE PUTS IT INTO
JEOPARDY, IF HE ENGAGES IN A HAZARDOUS SPECULATION; he is not
bound to keep it or deal with it as the property of the principal, but
he is of course answerable for the amount, because he has contracted,
having received that money, to repay to the principal, when demanded, a
sum equivalent to that paid into his hands.” (quoted in UK Law Essays,
Relationship Between A Banker And Customer,That Of A Creditor/Debtor, emphasis added,)
Holding that the relationship between a banker and his customer was one of debtor and creditor and not one of trusteeship,
Lord Brougham said:
“This trade of a banker is to receive money, and use it as if it were his own, he becoming debtor to the person who has lent or deposited
with him the money to use as his own, and for which money he is
accountable as a debtor. I cannot at all confound the situation of a
banker with that of a trustee, and conclude that the banker is a debtor
with a fiduciary character.”
In plain simple English –
bankers cannot be prosecuted for breach of trust,
because it owes no fiduciary duty to the depositor / customer, as he is
deemed to be using his own money to speculate etc. There is absolutely
no criminal liability.
The trillion dollar question is, Why has no one in the Justice
Department or other government agencies mentioned this legal principle?
The reason why no one dare speak this legal truth is because there
would be a run on the banks when all the Joe Six-Packs wise up to the
fact that their deposits with the bankers CONSTITUTE IN LAW A LOAN TO
THE BANK and the bank can do whatever it likes even to indulge in
hazardous speculation such as gambling in the global derivative casino.
The Joe Six-Packs always consider the bank the creditor even when he
deposits money in the bank. No depositor ever considers himself as the
creditor!
Yes, Eric Holder, the US Attorney-General is right when he said that
bankers cannot be prosecuted for the losses suffered by the bank. This
is because a banker cannot be prosecuted for losing his “own money” as
stated by the House of Lords. This is because when money is deposited
with the bank, that money belongs to the banker.
The reason that if a banker is prosecuted it would collapse the entire banking system is a big lie.
The US Attorney-General could not and would not state the legal
principle because it would cause a run on the banks when people discover
that their monies are not safe with bankers as they can in law use the
monies deposited as their own even to speculate.
What is worrisome is that your right to be repaid arises only when you demand payment.
Obviously, when you demand payment, the bank must pay you. But, if
you demand payment after the bank has collapsed and is insolvent, it is
too late. Your entitlement to be repaid is that of a lonely unsecured
creditor and only if there are funds left after liquidation to be paid
out to all the unsecured creditors and the remaining funds to be
pro-rated. You would be lucky to get ten cents on the dollar.
So, when the Bank of England, the FED and the BIS issued the
guidelines which became the template for the Cyprus “bail-in” (which was
endorsed by the G-20 Cannes Summit in 2011), it was merely a circuitous
way of stating the legal position without arousing the wrath of the
people, as they well knew that if the truth was out, there would be a
revolution and blood on the streets. It is therefore not surprising that
the global central bankers came out with this nonsensical advisory:
“The objective of an effective resolution
regime is to make feasible the resolution of financial institutions
without severe systemic disruption and without exposing taxpayers to
losses, while protecting vital economic functions through mechanisms
which make it possible for shareholders and unsecured and uninsured
creditors to absorb losses in a manner that respects the hierarchy of
claims in liquidation.”(quoted in
FSB Consultative Document: Effective Resolution of Systemically …)
This is the kind of complex technical jargon used by bankers to
confuse the people, especially depositors and to cover up what I have
stated in plain and simple English in the foregoing paragraphs.
The key words of the BIS guideline are:
“without severe systemic disruptions” (i.e. bank runs),
“while protecting vital economic functions” (i.e. protecting vested interests – bankers),
“unsecured creditors” (i.e. your monies, you are the dummy),
“respects the hierarchy of claims in
liquidation” (i.e. you are last in the queue to be paid, after all
secured creditors have been paid).
This means all depositors are losers!
Please read this article carefully and spread it far and wide.
You will be doing a favour to all your fellow country men and women and more importantly, your family and relatives.
