Legalized the theft of segregated customer funds

[Copper Catcher]

In a court case glossed over by the corporate media earlier this month, the U.S. Court of Appeals, Seventh Circuit has ruled that individual segregated bank accounts may be turned into the property of a third-party under circumstances of duress.

“In other words, if a financial institution fails, clients, depositors and pension funds may not get some or all of their money back in a bankruptcy,” writes Dominique de Leveling de Bailleul for Beacon Equity Research.

The Sentinel ruling has legalized the theft of segregated customer funds and pensions by large banks and financial institutions.

Moreover, the ruling overrides protection afforded by Federal Deposit Insurance and other government insurance programs and leaves “millions of investors, depositors and retirees unaware that they are no longer account holders of their own funds, per se, but, instead, have suddenly become stockholders of the institution with which they have deposited their money,” de Leveling de Bailleu writes.

Ann Barnhardt points out that the ruling sets the stage for bankster consolidation ahead of an economic collapse.

Barnhardt writes on her blog that “all customer funds in the United States are now the legal property of JP Morgan, Goldman Sachs” and other mega-banks and financial institutions.
“Sentinel took customer segregated money and fraudulently used it as the collateral on a loan from Bank of New York Mellon for $312 million to fund their own in-house proprietary trading operations. When the Sentinel Ponzi collapsed, BNYM sued to go to the front of the line of creditors – ahead of the customers of Sentinel whose money was fraudulently used as collateral, which has now been ‘linguistically sanitized’ into the word ‘hypothecated,’” she writes.

“What this means is that even if Jon Corzine is somehow dragged into court by private citizens, because you know damn good and well that the Justice Department will never, ever touch him.”

Corzine is so confident of his fate, he has decided to launch a hedge fund.

“Insurance is designed to cover discreet, individual catastrophes. Okay? If one bank fails, the FDIC can come in and backstop that one bank, no problem,” Barnhardt explains.
“What do you think is going to happen if the entire system collapses? What happens, do you think, if, even, let’s say 25 percent of the banks or the banking capacity in the United States fails? We are now talking trillions and trillions of dollars in deposits.”

Barnhardt places blame in part for the coming economic catastrophe on the American people because they have voted into office psychopaths who protect bankster psychopaths.

“The perfection of the correlation to the psychopaths running the government and financial sector is hard to improve upon. They have ZERO remorse. They are not sorry, but disgusted and indignant that they were caught, and that society has the gall to hold them to any account,” she notes.

http://www.infowars.com/fed-court-rules ... -pensions/

FDIC Facts:

The FDIC shows $15.3 billion (Q1 2012) available to insure approximately $4.7 trillion of deposits (last reported, Q4 2008), or an insurance pool equivalent to one-third of one cent (0.0033) held at the FDIC for each dollar insured within the banking system.

Presently, the FDIC cannot make whole on even one percent of bank deposits covered under its insurance program, though it claims to cover up to $250,000 for each account, a promise that surely will be broken (at least when compared with today’s purchasing power of one dollar) during a systemic banking system failure, according to Barnhardt.

“The analogy is to the fire department,” she adds. “The fire department work great if one house is on fire. What happens if the entire city, if every structure in the city is on fire?”

[coincrazy]

I was talking about this with a friend who is a long time banker. His explanation for this is that every customer signs on the line when they setup these types of accounts. It's in the black and white of their contracts and they've authorized the hypothecation of their assets. The receiving bank (creditor) also has a ucc lien on the banks assets and this puts them at the top of the line come time for collection.

It's a bum deal for "customers" of these institutions but it's all in the fine print.

[youtube]http://www.youtube.com/watch?v=zSQNl4V_R88&t=15s[/youtube]

http://www.youtube.com/watch?v=zSQNl4V_R88&t=15s

[shinnosuke]

There's a brilliant artist on zerohedge named williambanzai7 who throws together really cutting edge political satire all the time. Here's a recent offering. Note Pelosi standing on Corzine's head. Corzine, by the way, is still a free man although this bit of encouraging news came out today:
http://www.washingtonpost.com/business/economy/house-report-blames-corzine-for-collapse-of-mf-global/2012/11/14/a22c7c24-2ea1-11e2-beb2-4b4cf5087636_story.html

Lord of the Flies.jpg (220.27 KiB) Viewed 403 times

[68Camaro]

Likewise I mentioned this to my wife the attorney and she says she deals with this all the time in her work; that this is nothing new. It just means that when the collapse comes it will come fast and all the supposed protections (FDIC etc) will be useless - they are only effective when applied to the minor day-to-day blips. There is nothing in the system to protect against major collapse. The bankers know this. The Fed knows this. Which is why they must be scared out of their wits right now.

[Sheikh_yer_Bu'Tay]

I learned about this during the Savings & Loan blow-out during Bush-1. People got pennies on the dollar from the FSLIC. The FSLIC had a federally mandated cash fund on hand for failed S&L members. It got maxed out so fast, most people could not react fast enough. The ones who had pulled money out just ahead of the S&L debacle were forced to return their money for disbursement among the other S&L members.

The FDIC is a private corporation. It is just like all other insurance corporations. It has a percentage of it's assets held liquid in the event of an emergency. IF all banks fail at once, the FDIC liquid assets fund will vanish like a vapor into thin air.

[mongo]

Its been said on this forum more than once if you dont have physical possession of your assets you dont own them.

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