Be prepared for the next great transfer of wealth. Buy physical silver and storable food.
wallstreetonparade.com / By Pam Martens and Russ Martens: January 22, 2016
Thomas Hoenig, Vice Chair of the FDIC, Testifying Before the House Financial Services Committee On June 26, 2013
We are in the midst of an unprecedented collapse in commodity and oil markets, fueling fears about every kind of debt from emerging markets to junk bonds held in U.S. listed Exchange Traded Funds (ETFs). In this midst of this raging fear, what has the U.S. Federal Reserve proposed? It’s proposed a plan to make banks “safer” by making them issue more debt and become more highly leveraged. We’re not kidding folks.
Back in October, Fed Chair Janet Yellen had this to say about the plan:
“The long-term debt requirement we are proposing today, combined with our other work to improve the resolvability of systemic banking firms, would substantially reduce the risk to taxpayers and the threat to financial stability stemming from the failure of these firms. This is an important step toward ending the market perception that any banking firm is ‘too big to fail.’ “
The plan is called TLAC, short for Total Loss-Absorbing Capacity, which boils down to having the systemically dangerous banks that might put taxpayers on the hook again for another bailout in a crisis, to hold more long-term debt that would absorb losses after stock equity is wiped out (think Citigroup in 2008). This would, in theory, allow recapitalization of subsidiaries so that they could continue operating. In other words, the bank holding company would file for bankruptcy while, ideally, the retail brokerage firm and the insured depository bank would remain solvent and continue operating. Good luck with that.
Where did this idea originate? At the Financial Stability Board, a pack of foreign central bankers and regulators, including U.S. representation, who are desperately attempting to reassure their respective constituents that they’ve cured the need for future taxpayer bailouts of the global banking behemoths.
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Thanks to BrotherJohnF