First there were the bank bailouts - the largest welfare cheque cut in the history of the planet. Then the austerity measures came. Now it's time for bank bail-ins.
Last month in Cyprus, the government seized the savings of uninsured depositors whose bank accounts held over 100,000 euros. It's called the bail-in model, or in banking parlance a "haircut," and the anti-globalization folks are warning that it could become the new normal.
And to prove their point, some are red-flagging the Canadian government's pre-budget document, its "Economic Action Plan 2013," which Finance Minister Jim Flaherty introduced in the House of Commons on March 21.
The document contains a short section identifying a bail-in regime for Canada's chartered banks that would allow the "rapid conversion of certain bank liabilities into regulatory capital" under a "risk management framework."
Prof. Michel Chossudovsky of Global Research calls the section "the most candid statement of confiscation of bank deposits as a means to 'saving the banks'" by a western government, although he acknowledges the word "confiscation" is never used.
But that doesn't mean it's not on the table.
In fact, while officials in Flaherty's department have assured reporters that insured deposits (eligible savings up to $100,000) would be safe under the bail-in regime, they gave no such assurances for deposits over that limit or mutual funds.
The budget document is more explicit, Thomas Walkom wrote Thursday in the Toronto Star.
"The budget," Walkom wrote, "says Flaherty will follow the recommendations set out in a 2011 report by the Financial Stability Board, a new international body headed by Bank of Canada governor Mark Carney. And those recommendations are blunt. Insured deposits would be protected. But uninsured deposits, including savings over the $100,000 limit and mutual funds, would be fair game."
Carney, recently appointed to head the Bank of England starting in June, was instrumental in shaping the provisions of the bail-in scheme for Canada's chartered banks, Chossudovsky noted: "Before his career in central banking, Carney was a senior executive at Goldman Sachs, which has played a behind-the-scenes role in the implementation of the bank bailouts and austerity measures in the EU."
Chossudovsky warns that government could ultimately use the bail-in option on credit unions and other "lesser banks" to concentrate more capital in the "Big Five." Wherever it's imposed, however, the damage would be the same: "The lower and middle income groups which are invariably indebted will not be the main target. The appropriation of bank deposits would essentially target the upper middle and upper income groups which have significant bank deposits. The second target will be the bank accounts of small and medium sized firms."
Meanwhile, CBC reported yesterday that President Barack Obama has picked Bruce Heyman, a partner at Goldman Sachs in Chicago, to be the new U.S. ambassador to Canada.
"Well known as a high-level fundraiser to Barack Obama, Heyman and his wife Vicki, also a fundraiser, raised more than $1 million for Obama and were on his national finance committee," CBC reported. "Heyman runs the private wealth fund at Goldman Sachs and his areas of responsibility include parts of Canada."
Isn't it nice to know that we're being taken care of?
