Canada to introduce "bail in"

[play.soccer]

Canada will introduce legislation to implement a "bail-in" regime for systemically important banks that would shift some of the responsibility for propping up failing institutions to creditors.



The proposed plan outlined in the federal budget released on Tuesday would allow authorities to convert eligible long-term debt of a failing lender into common shares in order to recapitalize the bank, allowing it to remain operating.



Source: CNBC



The above story suggests that only bondholders would be at risk of a bail-in but we all know that is just some sugar to make what’s coming go down easier.



What’s coming?



Savings deposits being used to bail-in banks. Legislation is in the works in Canada, New Zealand, the UK, Germany, and even the US to do precisely this.



This whole template was laid out in Europe in 2012. Europe is ground zero for Keynesian Central Planning: a massive welfare state overseen by non-elected officials and Central Bankers who willingly break the rule of law whenever it suits them,



The guinea pig for the template was Cyprus.



The quick timeline for what happened in Cyprus is as follows:



· June 25, 2012: Cyprus formally requests a bailout from the EU.

· November 24, 2012: Cyprus announces it has reached an agreement with the EU the bailout process once Cyprus banks are examined by EU officials (ballpark estimate of capital needed is €17.5 billion).

· February 25, 2013: Democratic Rally candidate Nicos Anastasiades wins Cypriot election defeating his opponent, an anti-austerity Communist.

· March 16 2013: Cyprus announces the terms of its bail-in: a 6.75% confiscation of accounts under €100,000 and 9.9% for accounts larger than €100,000… a bank holiday is announced.

· March 17 2013: emergency session of Parliament to vote on bailout/bail-in is postponed.

· March 18 2013: Bank holiday extended until March 21 2013.

· March 19 2013: Cyprus parliament rejects bail-in bill.

· March 20 2013: Bank holiday extended until March 26 2013.

· March 24 2013: Cash limits of €100 in withdrawals begin for largest banks in Cyprus.

· March 25 2013: Bail-in deal agreed upon. Those depositors with over €100,000 either lose 40% of their money (Bank of Cyprus) or lose 60% (Laiki).



The most important thing we want you to focus on is how lies and propaganda were spread for months leading up to the collapse. Then in the space of a single weekend, the whole mess came unhinged and accounts were frozen.



One weekend. The process was not gradual. It was sudden and it was total: once it began in earnest, the banks were closed and you couldn’t get your money out.



Depositors lost between 40% and 60% of their savings above €100,000 as it was converted into bank equity. However, once it became equity, it could go to ZERO just like any stock.



That’s precisely what happened.



Account holders at Bank of Cyprus lost almost half their money above the €100,000 level, receiving stock in the bank as compensation. Those shares have since plummeted in value.



Uninsured depositors in Laiki Bank, also known as Cyprus Popular Bank, the nation’s second-largest lender, lost everything because the bank failed.



Source: NY TIMES.



As for those trying to get their money out of Cyprus, it took TWO YEARS before the final capital controls were lifted.



And the last remaining restrictions on transfers of money outside of Cyprus, imposed two years ago, will be lifted next month (APRIL 2015), said Chrystalla Georghadji, the governor of the country's central bank.



Source: NY TIMES.



So… depositors had 40% to 60% of their deposits above €100,000 converted into bank equity… equity which could then go to ZERO… and those who tried to get their money out of the country had restrictions in place for TWO YEARS.



This is the template for what’s going to be implemented globally in the coming months. When push comes to shove, it will be taxpayers, NOT Central Banks who are on the hook for the next round of bailouts.

Indeed, we've uncovered a secret document outlining how the Feds plan to take hold of savings during the next round of the crisis to stop individuals from getting their money out.




Scary times ahead.

[JimPS]

There are some serious and disturbing aspects of this proposed legislation change.

Canadians are brainwashed into believing all the crap that our banks are too big and to ethical to fail and bank failures will never happen here.

The international bankster-gangsters know damn well that the world economies and the entire western monetary systems are extremely shaky right now and they are just getting their compliant governments to protect their own interests - at the expense of depositors.

If your country's almost broke, you might want to consider not holding all of your savings in your countries banking system.

I wonder if some of our more illustrious billionaires know whats in store and that's why they are bailing out and moving off to other countries

[silverdoctor]

When Harper pushed this through one of his omnibus bills, people wouldn't believe it.

[rottie]

another link to read through
http://www.zerohedge.com/news/2016-03-22/its-official-canadian-bank-depositors-are-now-risk-bail-ins

[rugatika]

When Harper pushed this through one of his omnibus bills, people wouldn't believe it.

I have to admit I likely wouldn't have believed it if I had heard about it. The zerohedge article says it was the Liberals that pushed it through. When did Harper push it through?? What's the discrepancy?

[whiteout]

Harper had it back in 2013. The biggest thing to understand is that depositors money is not subject to this, despite the fact people seem to love to sell it that way.

[rugatika]

http://canadiantimes.ca/ct2/index.php/canadian-times/522-harper-maintains-bail-in-regime-in-his-2013-budget

The Government proposes to implement a ―bail-in‖ regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.

http://www.cbc.ca/news/business/bank-bail-in-plan-shouldn-t-worry-canadians-carney-says-1.1320808

When the government says "not to worry"...worry.

Interesting stuff.

I'm trying to remember, but hasn't the bank guarantee on deposits always been up to $100,000?? Now it looks like they're adding that they can use anything over that amount as bank capital???


Here's what I found:
http://www.thestar.com/business/personal_finance/2013/04/07/most_canadians_deposits_not_at_risk_if_bank_fails_ but_check_cdic_protection_roseman.html

Kathleen Perchaluk, press secretary to Finance Minister Jim Flaherty, sprang into action. She sent me an email last Wednesday, denying the rumours.


“The bail-in scenario described in the budget has nothing to do with depositors’ accounts and they will in no way be used here,” she said.


“If a bank is having severe difficulties, the bail-in regime would force certain debt instruments to be converted into equity to recapitalize the bank.”


In a bailout arrangement, taxpayers’ money has to be used to save a failing financial institution, she said by way of background.


In a bail-in arrangement, a failing financial institution has to tap into its own special reserves or assets, which it has been forced to put aside, to keep its operations going. This keeps a bank intact without using taxpayers’ money.


So, there’s no more uncertainty about CDIC-insured deposits. But when Toronto Star columnist Thomas Walkom asked if savings over $100,000 could be at risk, he was told that Ottawa had to consult the banks first.


This is all from the 2013 PROPOSAL of the Conservatives. Not sure if it ever passed into law though. I'm assuming not since the Liberals apparently brought it in.

[rugatika]

Harper had it back in 2013. The biggest thing to understand is that depositors money is not subject to this, despite the fact people seem to love to sell it that way.

So what happens to anything over 100grand? Lost only if the bank goes under? Or would that be available to a bail-in?

[raab]

So what happens to anything over 100grand? Lost only if the bank goes under? Or would that be available to a bail-in?

It gets taken and you get shares in a failing bank. And people wonder why I didn't like the Cons... Under the Cons it was anything over 100k, I think the Libs have changed it so that they can only take 10% of that amount. Either way it's bull****. We need a revolution in this country. We the people are always being screwed. What we were told would happen under Communism has happened under Capitalism. The government, banks, and multi national corporations run everything.

[rugatika]

It gets taken and you get shares in a failing bank. And people wonder why I didn't like the Cons... Under the Cons it was anything over 100k, I think the Libs have changed it so that they can only take 10% of that amount. Either way it's bull****. We need a revolution in this country. We the people are always being screwed. What we were told would happen under Communism has happened under Capitalism. The government, banks, and multi national corporations run everything.

Got anything concrete I can read? Where did you learn this?

Here's an article that seems to contradict what you are saying.

http://www.theglobeandmail.com/report-on-business/ottawa-clears-up-confusion-over-bank-bail-in/article10697667/

For the past two years Canadian regulators have used, without much controversy, the term “bail-in” to describe their proposed plan for stabilizing the sector in a crisis. However, when government officials in Cyprus ordered a bail-in of its banks last week that took a cut of customers’ deposits, the term took on a much different meaning.

The Finance Department issued a clarification Tuesday explaining how a Canadian-style bail-in of the banks would work, should it be needed. The statement emphasized that depositors’ money would not be used to help stabilize a shaky bank. Instead, Canadian banks must rely on their own capital, which they must set aside for a rainy day.

While that point was widely known within banking circles when regulators began drawing up the proposed new rules over the past few years, the situation in Cyprus sparked public scrutiny of this arcane issue. Over the weekend, news reports, blogs and Internet discussions began erroneously speculating that Canada’s bail-in plan, which was mentioned in the recent federal budget, could target deposits here.

Some banks and government departments received phone calls from Canadians wondering if their deposits could be used in similar fashion, prompting the clarification from Finance on the differences between the two countries’ proposals.

“The bail-in scenario described in the Budget has nothing to do with depositors’ accounts and they will in no way be used here,” Finance Minister Jim Flaherty’s press secretary Kathleen Perchaluk said in a statement Tuesday. “Those accounts will continue to remain insured through the Canada Deposit Insurance Corporation, as always.”

The confusion stems from the fact that a “bail-in” can take many forms. Typically, it refers to funds that a bank draws upon to stabilize itself in a crisis – funds that come from within the organization itself. And it differs from a bail-out, in which the bank receives emergency capital from an outside source, such as the government.

Canada began drawing up rules for a bail-in plan a few years ago in an attempt to avoid the large government bailouts required by some U.S. banks during the credit crisis. Under the proposed Canadian plan, banks would set aside contingent capital, such as shares, which could be quickly converted to cash to provide liquidity and stabilize their operations should a crisis hit.

And the article goes on....looks like it's not anything like what was being said. I'm still unclear on who brought this into actual law though. Was the Liberal bill just a continuation of the Conservative proposal, or did the Cons ever get past the proposal stage?

[raab]

This is a good article on it. Https://pressfortruth.ca/top-stories/what-bail-means-why-you-shouldnt-hold-your-money-big-five-banks/

Sounds like it was brought in with the 2013 Economic Action Plan.

[lmtada]

Didn't confiscate depositors money in 2008/9. I don't buy it. :snapoutofit:

[rugatika]

This is a good article on it. Https://pressfortruth.ca/top-stories/what-bail-means-why-you-shouldnt-hold-your-money-big-five-banks/

Sounds like it was brought in with the 2013 Economic Action Plan.

How did Harper bring it in, if the Liberals are still proposing it in the 2016 budget? Sounds like it's been in the proposal stage for years now.

http://www.budget.gc.ca/2016/docs/plan/ch8-en.html

Introducing a Bank Recapitalization “Bail-in” Regime

To protect Canadian taxpayers in the unlikely event of a large bank failure, the Government is proposing to implement a bail-in regime that would reinforce that bank shareholders and creditors are responsible for the bank’s risks—not taxpayers. This would allow authorities to convert eligible long-term debt of a failing systemically important bank into common shares to recapitalize the bank and allow it to remain open and operating. Such a measure is in line with international efforts to address the potential risks to the financial system and broader economy of institutions perceived as “too-big-to-fail”.

The Government is proposing to introduce framework legislation for the regime along with accompanying enhancements to Canada’s bank resolution toolkit. Regulations and guidelines setting out further features of the regime will follow. This will provide stakeholders with an additional opportunity to comment on elements of the proposed regime.


Bail-in Regime for Banks


Canada’s financial system performed well during the 2008 global financial crisis. Since that time, Canada has been an active participant in the G20’s financial sector reform agenda aimed at addressing the factors that contributed to the crisis. This includes international efforts to address the potential risks to the financial system and broader economy of institutions perceived as “too-big-to-fail”. Implementation of a bail-in regime for Canada’s domestic systemically important banks would strengthen our bank resolution toolkit so that it remains consistent with best practices of peer jurisdictions and international standards endorsed by the G20.


The difference in wording appears that the Liberals have added that "creditors" would now be responsible for bank risk, along with shareholders. (creditors would seem to me to be another word for depositors)

The Cons seemed to be pretty clear that creditors would not be on the hook no???

I'm not a banking professional or anything...AO must have a CEO of one of the big five banks on here for clarification...haha.

[rugatika]

Didn't confiscate depositors money in 2008/9. I don't buy it. :snapoutofit:

It was initially proposed in 2013...and it doesn't appear it has gotten past the proposal stage yet. Glaciers move faster than government bureaucrats and politicians (which may be a good thing).

[raab]

https://www.google.ca/url?sa=t&source=web&rct=j&url=http://www.budget.gc.ca/2013/doc/plan/budget2013-eng.pdf&ved=0ahUKEwiph4Lb897LAhXIsIMKHX2iBCMQFggaMAA&usg=AFQjCNERie1vhKPH6A-Qh0CRA5ieTW1gyQ&sig2=bHeiWCo8d6ZkHHUdNyaCNw

Page 145 at the top. They brought it in but had no clear definitions or framework. Instead they were saying that they would work with stakeholders (shareholders and depositers) to come to a resolution.

[rugatika]

https://www.google.ca/url?sa=t&source=web&rct=j&url=http://www.budget.gc.ca/2013/doc/plan/budget2013-eng.pdf&ved=0ahUKEwiph4Lb897LAhXIsIMKHX2iBCMQFggaMAA&usg=AFQjCNERie1vhKPH6A-Qh0CRA5ieTW1gyQ&sig2=bHeiWCo8d6ZkHHUdNyaCNw

Page 145 at the top. They brought it in but had no clear definitions or framework. Instead they were saying that they would work with stakeholders (shareholders and depositers) to come to a resolution.

Yep...that's where I got my original quote from above.

The Government proposes to implement a ―bail-in‖ regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.


I don't see where it has ever gotten past the proposal stage (by either Con or Liberal govs).

The Cons said "certain liabilities" and later clarified, but never put into law...that it would be from set aside capital (whatever form that would be in??) and not from depositors, while the Liberals said "shareholders and creditors" would assume the risk.

[raab]

Yep...that's where I got my original quote from above.

The Government proposes to implement a ―bail-in‖ regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.


I don't see where it has ever gotten past the proposal stage (by either Con or Liberal govs).

The Cons said "certain liabilities" and later clarified, but never put into law...that it would be from set aside capital (whatever form that would be in??) and not from depositors, while the Liberals said "shareholders and creditors" would assume the risk.

The act says stakeholders which would include depositors as they basically lend their money to the bank. The 2013 Economic Action Plan passed so I would assume it came into law with the Conservatives having a majority. http://www.parl.gc.ca/LegisInfo/BillDetails.aspx?Language=E&Mode=1&billId=6108103

[raab]

At this point I think it's easy to see that both the left wing and right wing parties in this country come from the same bird. Why do we even vote?

[rugatika]

The act says stakeholders which would include depositors as they basically lend their money to the bank. The 2013 Economic Action Plan passed so I would assume it came into law with the Conservatives having a majority. http://www.parl.gc.ca/LegisInfo/BillDetails.aspx?Language=E&Mode=1&billId=6108103

If it came into law with the Cons then why are the Libs still proposing it?

[raab]

If it came into law with the Cons then why are the Libs still proposing it?

Could be proposing changes. I know the libs have something in their about 10% of the deposits.

[chasingtail]

When we go to a cashless system like some of the dumb dumbs on here favour you will really be screwed.