Was Cyprus a one-off situation? At Alternet, Ellen Brown says no, and she indicates that the repeal of Glass-Steagall, “too big to fail” and the subsequent $230 trillion derivatives boondoggle should make many of us wary.
The Cyprus bail-in was not a one-off emergency measure but was consistent with similar policies already in the works for the US, UK, EU, Canada, New Zealand, and Australia, as detailed in my earlier articles here and here. “Too big to fail” now trumps all. Rather than banks being put into bankruptcy to salvage the deposits of their customers, the customers will be put into bankruptcy to save the banks. The big risk behind all this is the massive $230 trillion derivatives boondoggle managed by US banks . . . The tab for the 2008 bailout was $700 billion in taxpayer funds, and that was just to start. Another $700 billion disaster could easily wipe out all the money in the FDIC insurance fund, which has only about $25 billion in it.
Under the guise of protecting taxpayers, Dodd-Frank makes depositors of failing institutions are to be de-facto subordinated to interbank claims. Brown writes: “The FDIC was set up to ensure the safety of deposits. Now it, it seems, its function will be the confiscation of deposits to save Wall Street.” The urgent solution, is to repeal the super-priority status of derivatives, so that the banks themselves lose out to the security of the depositors.
