If a bank fails, what happens to depositors' money?

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thisisreallycomplicated
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Re: If a bank fails, what happens to depositors' money?

Post by thisisreallycomplicated » Tue Apr 30, 2013 12:07 am

Andres wrote:
thisisreallycomplicated wrote:I don't know exactly how they're going to do it. But the financial system is so complex, it won't be difficult for them to hide what they're doing, because most people won't understand it.
It won't be difficult. They'll just do it. They won't even try to hide it.
Look at how MF Global clients lost their accounts to the big boys, and the US govt "regulators" didn't even bother to prosecute. It is no surprise the MF Global CEO (Jon Corzine) was a well-connected former Goldman Sachs executive.
I hadn't heard about that one before.
“Now it’s conspiracy – they’ve made that something that should not even be entertained for a minute, that powerful people might get together and have a plan. Doesn’t happen, you’re a kook, you’re a conspiracy buff!” – George Carlin

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eeuunikkeiexpat
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Re: If a bank fails, what happens to depositors' money?

Post by eeuunikkeiexpat » Tue Apr 30, 2013 12:17 am

MF Global in retro really was a test ramp up exercise of what they can impose and get away with.

I was a client long time ago but thankfully my account changed over to RJO'Brien because of a broker shift prior to that. The idle funds in that RJO account were in fact returned to me about a year after the MF Global fiasco.

I believe Jim Rogers got burned by the MF Global fiasco.
There are two ways to be fooled. One is to believe what isn't true;

the other is to refuse to believe what is true.

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thisisreallycomplicated
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Re: If a bank fails, what happens to depositors' money?

Post by thisisreallycomplicated » Tue Apr 30, 2013 12:20 am

eeuunikkeiexpat wrote:No I never inferred that. I just wondered if that entity posting from Santiago Chile was not in fact a shill for S'sez and/or Jon Cobro given the subjects of his/her/its first posts along with claiming to be an escapee of the Empire, etc. Sounded soo manufactured, if you know what I mean.

The way he/she/it took off and ran with the info provided by Andres adds to the suspicion of a possible low skilled lawyer/relocation advisor type that could not get certain information from their own limited research and or language skills.
Yeah, I know what you mean. A lot of posts from new posters sound pretty contrived.
“Now it’s conspiracy – they’ve made that something that should not even be entertained for a minute, that powerful people might get together and have a plan. Doesn’t happen, you’re a kook, you’re a conspiracy buff!” – George Carlin

GJJIM
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Re: If a bank fails, what happens to depositors' money?

Post by GJJIM » Tue Apr 30, 2013 1:37 am

ajoknoblauch wrote:If it's a US bank, there's this thing called the Federal Deposit Insurance Corporation. Thanks, FDR!
FDIC?, yes indeed:

http://www.zerohedge.com/sites/default/ ... Derivs.jpg

With assets of $25B backing deposits of $9T, what could go wrong? :alien:

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Fugger
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Re: If a bank fails, what happens to depositors' money?

Post by Fugger » Tue Apr 30, 2013 9:59 am

The answer the OP´s question:

Yes there is a deposit insurance guaranteeing checking and saving account (unlimited) and demand deposits (with a limit of UF 108, less than USD 5´000). This is a deposit insurance and as such it insures the counterparty credit risk of the bank and nothing else.

Obviously the guarantee is only as good as the quality of the guarantor, in this case the Chilean central bank. In the 1985 banking crisis not only the insured depositors have been protected, but also everybody else has been bailed out (bond holders and unsecured depositors). This is a little bit more problematic as it creates the expectations that the same will happen in the next crisis with the result that investors disregard the basic principles of investing (such as diversification and assessment of counterparty credit risk).
1531 pacta sunt servanda

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JHyre
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Re: If a bank fails, what happens to depositors' money?

Post by JHyre » Tue Apr 30, 2013 10:06 am

If it's a US bank, there's this thing called the Federal Deposit Insurance Corporation. Thanks, FDR!
AKA: Socialize risk and privatize profit leading to risky & reckless behavior and massive crashes, not to mention massive Wall Street political donations. Thanks Democrats & Socialists!

John Hyre

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Fugger
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Re: If a bank fails, what happens to depositors' money?

Post by Fugger » Tue Apr 30, 2013 11:25 am

JHyre wrote:
If it's a US bank, there's this thing called the Federal Deposit Insurance Corporation. Thanks, FDR!
AKA: Socialize risk and privatize profit leading to risky & reckless behavior and massive crashes, not to mention massive Wall Street political donations. Thanks Democrats & Socialists!

John Hyre
The FDIC was actually one of the better working institutions in 2008/2009 were equity and bondholders and uninsured depositors were wiped out and treated according to the creditor hierarchy (i.e. WaMu). The main problem was that with the exception of Lehman the i-banks and a number of other institutions (i.e. AIG, Freddie Mac and Fannie Mae etc) which were bailed out.

The main problem with the FDIC is in my view that the insured limit is too high.
1531 pacta sunt servanda

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