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View Full Version : Your deposits are no longer safe in US Banks



Peter1469
08-12-2012, 07:56 AM
Link (http://www.reuters.com/article/2012/08/10/us-sentinel-appeals-decision-idUSBRE87900T20120810)


In a case surrounding the MF Global collapse, a federal appeals court upholds a lower court ruling for a bank that MF Global paid off with customer money holding that the bank was a higher "class" creditor than the account holders.


So let's get this straight: I deposit my money into Bank A. Bank A is suppose to keep customer accounts separate from its operating accounts. But Bank A uses my money to pay a debt it owes to Bank B- in violation of law, and the money now belongs to Bank B? A financial system cannot operate that way. It looks like just another way to make sure the Bankers get paid off at our expense.


However, Thursday's ruling suggests that brokerages can use customer funds to pay off other creditors, Sentinel trustee Fred Grede told Reuters.


"I don't think that's what the Commodity Futures Trading Commission had in mind" with its requirement that brokers keep customer money separate from their own, he said.


"It does not bode well for the protection of customer funds."


Worse, Grede said, is that the ruling suggests that a brokerage that allows customer money to be mixed with its own is not necessarily committing fraud.


That may raise the bar for proving that MF Global Holdings Ltd, under then-CEO Jon Corzine, misused customer funds as it scrambled to meet margin calls to back bets on European debt in the brokerage's final days. A $1.6 billion customer shortfall remains.

roadmaster
08-12-2012, 04:10 PM
IRA's can be wiped out in an instance. People who think they have security don't. It is committing fraud and they have been doing it for years.

Captain Obvious
08-12-2012, 05:47 PM
FDIC only insures a limited amount - something like $200k, might have been increased since the last time I checked. Everything else after that is subject to bankruptcy regs.

URF8
08-14-2012, 04:26 PM
The court decision adds a new level of risk to investing through intermediaries.

Trinnity
09-19-2012, 08:37 AM
This is not good. Keep your money in a safe - buy a safe. Install it in a secure and/or hidden manner.

Carygrant
09-19-2012, 10:54 AM
I defer to the details of your system but over here there are defined classes of creditors.
Unsurprisingly , the smaller business and individuals take bottom places .
I have dealt in cash whenever and wherever possible but only operate with the absolute necessary amount in a current Bank account .
I live on a Debit card but keep two Credit Cards open --but never effectively used ---so that in an extreme situation I would defraud the Credit Companies to the exact amount of my potential current account loss should the Bank go under . In fairness and in theory, however , individual Bank losses are covered up to £100 ,000 , I believe .

Goldie Locks
09-19-2012, 11:19 AM
Here in the states it's 250K

Chris
09-19-2012, 12:36 PM
Do all banks do this? Apparently they could, but then bank with those who do not, who respect your money.

Peter1469
09-19-2012, 05:10 PM
Here in the states it's 250K

If a few banks fail the government could keep that promise to pay. If a lot of banks failed that pot of money would run dry.

Peter1469
09-19-2012, 05:12 PM
Do all banks do this? Apparently they could, but then bank with those who do not, who respect your money.

After this court ruling we may see more banks do this. But it will go slow. This was just one appeals court. Probably the 2nd Circuit.