Vaporization of the rule of law

CONTAGION! DEPOSITOR HAIRCUT BAIL-INS SPREAD TO NEW ZEALAND, GOV’T DISCUSSING CYPRUS STYLE SOLUTION FOR BANK FAILURE!

Silver Doctors,

19 March, 2013

*BREAKING!

Depositor haircut wealth confiscations have just gone from a one-off in Cyprus to the new thing in 2013.

The New Zealand government is reportedly pursuing a policy of Cyprus style depositor haircuts for all future bank failures!

The plan would not limit the haircuts to any percentage, but would steal whatever is necessary from depositors to prop up the failing bank institution: Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

The rule of law in the entire Western financial world is apparently vaporizing faster than the spent fuel at Fukushima.

As New Zealand’s Voxy reports:

The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.

New Zealand’s plan reportedly will affect all savers equally:

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.

Cue the bank run panic in New Zealand.

Meanwhile, the FDIC today stated such a thing could never NEVER! happen in the US:

As the FreeBeacon reports:

American officials say the Federal Deposit Insurance Corporation (FDIC), which regulates and insures American bank deposits, does not have the authority under current law to undertake a measure as radical as the one proposed in Cyprus.

“There is no way [the FDIC could implement similar measures to backstop the American banking sector],” said agency spokesman Greg Hernandez. “The FDIC does not claw back any insured deposits.”


And from RT.....

New Zealand considers Cyprus-style banking failure solution

New Zealand depositors could face a Cyprus-style tax on their bank accounts, as the government is planning to impose a similar strategy on its banks warns the country's Green Party

RT,

19 March, 2013

New Zealand is facing a similar bank failure to Cyprus, is likely to adopt open bank resolution (OBR), which will see small depositors lose part their savings in favour of a big bank bailout, Green Party co-leader Russel Norman said. The country’s Finance Minister Bill English supports the open bank resolution.

"Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand," said Norman, adding that the Reserve Bank is in the "final stages" of implementing an OBR system.

New Zealand banks’ depositors will have their savings cut by a certain percentage needed to keep their bank afloat.

The Green Party however has major doubts, that OBR tactics is appropriate here. Norman underlined, that few depositors can reasonably evaluate the reliability of their bank. “Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming,” he added.

Norman believes that OBR policy is too radical saying few OECD countries use it, preferring deposit insurance schemes.

"A deposit insurance scheme is a much simpler, well-tested alternative to open bank resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure… [They] protect people's deposits up to a maximum ranging from $100,000 to $250,000," he said.

Cyprus announced last week that it plans to impose a 10 per cent tax on bank accounts as part of a 10 billion euro bailout by the European Union. The news caused panic across the island as people rushed to cash machines to withdraw their savings. The Cypriot parliament will vote on the deposit levy on Tuesday.