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Response to WillyT (Original post)

Tue Dec 13, 2011, 11:57 PM

19. On Thom Hartmann yesterday, I heard the 2 words, "claw back," w/ref to bank accounts.

It was in passing, I was at work. Googled it today and this is what I found:

http://market-ticker.org/akcs-www?post=198650


"...you could lose everything in your bank and investment accounts -- every single dime.
Recently Bank of America transferred a bunch of derivatives into their banking arm. "A bunch" means
somewhere around $80 trillion worth... ....part of the bankruptcy "reform" law in 2005 placed
derivative claims in front of depositors in a business failure - including a bank failure.



What JP Morgan is claiming in the MF Global case is that the derivative trade (which is exactly what
a "Repo to Maturity" trade is - it's a derivative) is entitled to preference in the case of MF Global over
those who had cash there for safekeeping either as a margin deposit or just as free cash as you would
hold free cash in a bank.


If a major bank blows up this very same claim, supported in existing Bankruptcy Law with the
changes signed by George Bush in 2005, will be used to steal the entirety of your bank account,
and if you detect the impending blowup shortly before it happens -- say, 90 days before -- you're
still exposed to the risk through clawback!


Don't run any crap about FDIC insurance in this sort of event either -- in the singular case of Bank of
America we're talking about $77 trillion in face value of derivatives. While "notional" values are wildly
beyond what anyone would have to pay (as that figure assumes the reference all goes to a literal value
of zero) the fact remains that with even a 5% loss the amount of money required would be roughly
equal to the entire US Federal Budget, which the FDIC clearly does not have -- nor could it acquire.



I mean, WTF, the chips in the casino -- there are so many of them, it's like trying to calculate mass, or
the number of particles in a quantum physics problem -- outweigh actual, folding cash money, all the
sweat-from-brow-earned, deposits in Joe Lunch Buckets checking account.

Digital, bogus "bucket shop" investment instruments are "more real" than what everyone thinks of as
our (analog?) monetary system?


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LineReply On Thom Hartmann yesterday, I heard the 2 words, "claw back," w/ref to bank accounts.
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