Bank of International Settlements to Allow “Bail Ins” for Distressed, Failing Banks

Building upon agreements to stabilize the global financial system, the Bank of International Settlements announced this month that central banks were “making progress” to implement Basel III, sparking concerns over “bail ins” — that checking and savings accounts could be tapped to stabilize distressed or failing banks.

Basel III’s bail-in mechanisms do not allow banks to directly take money out of bank accounts. Instead, bail-ins are designed to ensure that certain types of bank creditors and shareholders bear losses during a financial crisis.

In The Great Taking,” David Rogers Webb clarifies that account holders could lose their money during a bank closure. “The Federal Reserve was indemnified by the government (i.e., the public) for any losses. And so, large-scale closure of banks and taking of bank deposits is not unprecedented. Holders of cash in banks are unsecured creditors with no enforceable claim to their money. (It) has been promised that there will be no taxpayer bailout this time—as if that is a good thing. Why? Simply because this will allow the banks to be closed rather than nationalized. Then all deposits and assets will be taken by the ‘protected class’ of secured creditors. This is where it is going.”