Customer Deposits Are Property of the Bank: Close Your Account NOW

By Susanne Posel - heintelhub.com - August 24, 2012 – h/t to MJ

In June of 2012, Eric Bloom, former chief executive, and Charles Mosely, head trader of Sentinel Management Group (SMG) were indicted for stealing $500 million in customer secured funds.

Both Mosely and Bloom were accused of “exposing” customer segregated funds “to a portfolio of highly risky derivatives.”

These customer funds were used to “back up personal investments” which were part of “collateral for a loan from Bank of New York Mellon” (BNYM).

This loan derived from stolen customer monies was “used to purchase millions of dollars worth of high-risk, illiquid securities, including collateralized debt obligations, or CDOs, for a trading portfolio that benefited Sentinel’s officers, including Mosley, Bloom and certain Bloom family members.”

Fast forward to August 9th of 2012, and the 7th Circuit Court of Appeals (CCA) rules that BNYM can be moved to first in line of creditors over the customers that had their funds stolen by SMG.

When a banking customer deposits their money into their bank account, the Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SPIC) are in place to protect the customer from fraud or theft.

The ruling from the CCA means that these regulatory systems will not insure customer funds, investments, depositors and retirees who hold accounts in banks.

In fact, the banking institution is now legally allowed to use those customer funds deposited as collateral, payment on debts for loans made, or free use on the stock market to purchase investments as the bank sees fit.

Fred Grede, SMG trustee, explained that brokers are no longer required to keep customer money separate from their own. “It does not bode well for the protection of customer funds.”

Since the ruling gives banks the right to co-mingle customer funds with their own, no crime can be committed for the use of customer deposited monies.

According to Walker Todd , former lawyer for the Federal Reserve Bank of New York and Cleveland:

“Basically, there is a new 7th Circuit opinion saying that there is no reason to impose a constructive trust on a lender’s takings of customers’ funds from client commodity firms that were used (inappropriately) to secure the firms’ borrowings, as long as the lender can say that it did not know WITH CERTAINTY that customers’ funds were being repledged. Negligence and misappropriation (vs. knowing criminal intent) are now a sufficient excuse for letting the lender keep the money and go to the head of the line for distributions in bankruptcies of the client commodity firms.”

When a customer deposits money into a bank, the bank essentially issues a promise to have those funds available when the customer returns to withdraw the deposited amount.

When the same customer withdraws funds from their account (whether checking or savings) the customer assumes that the bank has enough funds to cover their withdrawal; including the presumption that their monies are separate from the bank’s assets.

Now, those funds are up for grabs by the bank at their discretion without explanation to the customer – nor is the bank obligated to recoup the customer should they “lose” those funds due to bad loans, bankruptcy or stock market loss.

In Texas, Pamela Cobb, manager of Bank of America (BoA), stole an estimated $2 million from customer funds for personal use. Cobb had been taking customer segregated funds since 2002.

Customers have complained of fraudulent charges placed on their accounts that BoA cannot explain. When the customer brings these charges to the in-house fraud department, they are given the run-around until they acquiesce.

Other customers have had their private possessions stolen right out of their safety deposit box held at BoA. The safety deposit box was drilled into and the contents shipped to the BoA corporate holding center in South Carolina.

In 1992 to 2003, Citibank called their theft of customer funds “account sweeping” wherein they stole more than $14 million from customers nationally.

Using computerized credit card processes to remove positive and negative balances from customers, the scheme included double payments or funds paid out on returned purchases that were then attributed back to the customer.

At Chase bank, an anonymous employee opened an account under a customer name (targeting an Alzheimer’s sufferer), complete with a personal debit card.

An estimated $300 per day was withdrawn on the fraudulent account. When family representing the victim alerted Chase, they brushed them off with an internal investigation claim – even as the family sought legal action.

Banking fraud against the elderly has risen of late, since banks realize they can steal massive amounts of cash from their aging customers with little to no repercussions.

The recent ruling on SMG has given the banking industry the legal backing they have been lacking when stealing from their customers.

Our financial institutions have been planning for a financial collapse wherein the US government will not offer assistance.

The resolution plans required by the Federal Reserve Bank, described schemes to have the major domestic banks remain afloat by selling off assets, finding alternative sources of funding, reducing risky measures that make a quick buck. These strategies were to be perfected with “no assumption of extraordinary support from the public sector.”

The mega-banks, through Wall Street, are also acquiring firearms, ammunition and control over private mercenary corporations like DynCorp and ‘Blackwater” as authorized by the Department of Defense (DoD) directive 3025.18 .

DynCorp is a military-based private mercenary contractor that provides (among other services) intelligence training and support, international security, contingency plans and operations. Ninety-six percent of their funding is based on annual revenues from the US federal government.

The international branch of DynCorp has operated as a “police force” even assisting local law enforcement during Hurricane Katrina.

Named as investors for the amassing of gun and ammunition manufacturers are Citibank, BoA, Barclays and Deutsche Bank who are pouring money into Cerebus and Veritas Equity who have taken over private corporations involved in the controlling riot situations.

The Federal Reserve Bank, one of the heads of banking cartels, has their own police force which operates as a protective security for the Fed against the American public.

As part of the Federal Reserve Act signed in 1913, the designation of a Federal Law Enforcement – special police officers that are exclusively regulated by authority of the Fed (whether in uniform or plain clothes.

These specialized police officers (who train with Special Response Teams) can work in tandem with local law enforcement or US federal agencies. These officers are heavily armed with semi-automatic pistols, sub machine guns and assault rifles as well as body armor.

Of recent, when withdrawing cash from an ATM, the daily allotted amount has decreased with some banks, thereby forcing the customer to go into the branch and extract the difference with a teller.

At this point, according to anonymous informants, the customer is taken into a backroom to be questioned as to why they want the cash, what they are purchasing with the cash, why they are not choosing to use a debit card or another form of digital trade to make the purchase. These questions are not only intrusive, they are illegal.

Some anonymous sources have said that banking representatives who conduct the integrations are directed to keep a record of customer responses on an online application that will be sent to the FBI in conjunction with Patriot Act mandates on tracking banking activity.

Customer funds are no longer secure, no longer backed by the FDIC or other insurance corporations, and banks are legally allowed to co-mingled customer money with other funds of the bank. The only safe place for your money is with you.

Now is the time to close your bank account.

Susanne Posel is the Chief Editor of Occupy Corporatism Our alternative news site is dedicated to reporting the news as it actually happens; not as it is spun by the corporate-funded mainstream media. You can find us on our Facebook page.

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Exclusive: U.S. lets China bypass Wall Street for Treasury orders

(Reuters) - China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury's first-ever direct relationship with a foreign government, according to documents viewed by Reuters.

The relationship means the People's Bank of China buys U.S. debt using a different method than any other central bank in the world.

The other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for U.S. debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions.

China, which holds $1.17 trillion in U.S. Treasuries, still buys some Treasuries through primary dealers, but since June 2011, that route hasn't been necessary.

The documents viewed by Reuters show the U.S. Treasury Department has given the People's Bank of China a direct computer link to its auction system, which the Chinese first used to buy two-year notes in late June 2011.

China can now participate in auctions without placing bids through primary dealers. If it wants to sell, however, it still has to go through the market.

The change was not announced publicly or in any message to primary dealers.

"Direct bidding is open to a wide range of investors, but as a matter of general policy we do not comment on individual bidders," said Matt Anderson, a Treasury Department spokesman.

While there is been no prohibition on foreign government entities bidding directly, the Treasury's accommodation of China is unique.

The Treasury's sales of U.S. debt to China have become part of a politically charged public debate about China's role as the largest exporter to the United States and also the country's largest creditor.

The privilege may help China obtain U.S. debt for a better price by keeping Wall Street's knowledge of its orders to a minimum.

Primary dealers are not allowed to charge customers money to bid on their behalf at Treasury auctions, so China isn't saving money by cutting out commission fees.

Instead, China is preserving the value of specific information about its bidding habits. By bidding directly, China prevents Wall Street banks from trying to exploit its huge presence in a given auction by driving up the price.

It is one of several courtesies provided to a buyer in a class by itself in terms of purchasing power. Although the Japanese, for example, own about $1.1 trillion of Treasuries, their purchasing has been less centralized. Buying by Japan is scattered among institutions, including pension funds, large Japanese banks and the Bank of Japan, without a single entity dominating.

Granting China a direct bidding link is not the first time Treasury has gone to great lengths to keep its largest client happy.

In 2009, when Treasury officials found China was using special deals with primary dealers to conceal its U.S. debt purchases, the Treasury changed a rule to outlaw those deals, Reuters reported last June. But at the same time it relaxed a reporting requirement to make the Chinese more comfortable with the amended rule.

Another feature of the U.S.-China business relationship is discretion: The Treasury tried to keep its motivation for the 2009 rule change under wraps, Reuters reported.

Documents dealing with China's new status as a direct bidder again demonstrate the Treasury's desire for secrecy -- in terms of Wall Street and its new direct bidding customer.

To safeguard against hackers, Treasury officials upgraded the system that allows China to access the bidding process.

Then they discussed ways to deflect questions from Wall Street traders that would arise once the auction results began revealing the undeniable presence of a foreign direct bidder.

"Most hold the view that foreign accounts only submit 'indirect bids' through primary dealers. This will likely cause significant chatter on the street and many questions will likely come our way," wrote one government official in an email viewed by Reuters.

In the email, the official suggested providing basic, general answers to questions about who can bid in Treasury actions.

"For questions more extensive or probing in nature, I think it prudent to direct them to the or Treasury public relations area," the official wrote.

The granting to China of direct bidder status may be controversial because some government officials are concerned that China has gained too much leverage over the United States through its large Treasury holdings.

For example, economist Brad Setser, who is a member of the National Economic Council and has also served on the National Security Council, has argued China's large Treasury holdings pose a national security threat.

Writing for the Council on Foreign Relations in 2009, Setser posited that China's massive U.S. debt holdings gave it power over U.S. policy via the threat of a swift, large sale of U.S. debt that could send the market into turmoil and drive up interest rates.

But Treasury officials have long maintained that U.S. debt sales to China are kept separate from politics in a business relationship that benefits both countries. The Chinese use Treasuries to house the dollars they receive from selling goods to the United States, while the U.S. government is happy to see such strong demand for its debt because it keeps interest rates low.

A spokesman for the Chinese embassy in Washington did not respond to calls and emails seeking comment.

The United States has, however, displayed increasing anxiety about China as a cybersecurity threat. The change Treasury officials made to their direct bidding system before allowing access to China was to limit access to the system to a specially designed private network connection controlled by the Treasury.

China is among the most sensitive topics for bankers and government officials who court the country as a financial client because of its size and importance, and none would agree to comment on the record for this story.

A former debt management official at the Treasury who did not want to be identified said that as China's experience in the U.S. Treasury market has deepened over time, Chinese officials may have felt more comfortable taking the reins in the management of their holdings.

Their request to bid directly, in his view, came from a confidence that their money managers could buy U.S. debt more efficiently on their own than through Wall Street banks, which can often drive up the price of Treasuries at an auction if they know how much large clients are willing to pay. Such a practice that is not specifically illegal, though most traders would deem it unethical.

Evidence of China's growing sophistication as a money manager in the U.S. markets is clear in its expansion of operations in New York. Its money management arm, the State Administration for Foreign Exchange (commonly called SAFE), has an office in Midtown Manhattan and a seasoned chief investment officer -- former Pacific Investment Management Co derivatives head Changhong Zhu -- in Beijing.

A woman who answered the phone at SAFE's New York office said no one in the office was authorized to talk to the media.

(Editing by Martin Howell and Steve Orlofsky)

Related:

WHY IS CHINA OUR NATION’S NATIONAL BANK

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The Biggest Bank in France Has Suddenly Cut ATM Card Access to Cash in Half and People are Freaking Out!

http://www.jovanovic.com/blog.htm I just got off the phone with Pierre Jananovic . . . La Banque Postale has lowered the limits on the amounts of cash customers can withdraw per week by 50%. First of all, for you Americans and Brits, the way France works its banking system – customers are limited to how much they can withdraw per week from their accts no matter what the balance. Now what has happened here is that Gold card members – who could take out 3,000 euros a week – are now limited to 1,500 a week. This was sudden, without warning, and people here in France are freaking out. Pierre tells me that its the first clear sign that liquidity in the European banking system is drying up. http://maxkeiser.com/2011/06/07/the-biggest-bank-in-france-has-atm-card-access-to-cash-in-half/ If you remember we warned about this happening  here in the U.S. (sometimes it really stinks to be right!) (Reprint below) And is it a coincidence that this is happening just as the big Bilderberg conference in St. Moritz is closing?    Is An ATM Cash Shortage Coming? Submitted by Tyler Durden on 11/08/2010 11:35 -0500 Image: Betsy Fletcher While we have no way to confirm or refute the validity of this statement presented by a supposed ATM business insider on Steve Quayle.com, it does bring up an interesting point regarding how banks may be conserving "petty cash." Of course, if this perspective is true, it validates concerns about bank capitalization, and explains the reason why the FDIC recently expanded insurance on checking accounts from $250,000 to infinity in an attempt to get Americans to put their money in their friendly neighborhood bank. Of course, that this contradicts everything that the Fed Chairman is trying to do by getting Americans to spend (or buy Netflix at a 1,000 P/E) instead of putting the money in the bank, is precisely the reason why Sheila Bair's relationship with Geithner and Bernanke is, shall we say, tenuous. From Steve Quayle (who may or may not have properly attributed the original article on Urban Survival). "George, I work with a business partner in the [region redacted] . We have combined between us 180 ATM machines that we service, Cash Load. In order to do this we NEED to order the money, 20's only from several banks on a weekly basis. This is a considerable amount weekly, 380k plus. Here is the interesting piece that is developing: In the past several weeks 4 of the MAJOR banks have informed us that they can no longer provide us with the cash for our business. Now the problem is that it is OUR money we are taking out! So speaking with bank "personnel" on the side my question was this, what is going on? how come we cannot take OUR money out? Answer: "they" are not authorized to hold, carry or have on hand anymore more than a certain amount of cash on hand! The amount we are getting, even though it is out of our account, they cannot order or have on hand that amount of cash at any time now. I am not talking small banks...large banks [large money center bank in America name redacted] etc...! We can see our ability to keep these machines with available cash is becoming more and more difficult. This has taken place just in the past few weeks. By the way, these banks were willing to lose our full business due to this issue. Trying to work with smaller banks now...we will see how long!" h/t Kyle Ben Bernanke Federal Deposit Insurance Corporation ATMs Crash Across The Country After “Bank Holiday” Warning Paul Joseph Watson -  Infowars.com - November 8, 2010 Following rumors of a “bank holiday” that could limit or prevent altogether cash withdrawals later this week, Twitter and other Internet forums were raging yesterday about numerous ATMs across the country that crashed in the early hours of Sunday morning, preventing customers from performing basic transactions. It’s unknown whether the crashes were partly a result of a surge of people trying to withdraw their money in preparation for any feared bank shutdown, or if mere technical glitches were to blame. The fact that the problem affected numerous different banks in different parts of the U.S. would seem to indicate the former. The Orange County Register reported that the problems were “part of a national outage” which prevented people from performing simple transactions such as cashing checks and withdrawing money. “Computer issues” were blamed for similar issues in Phoenix Arizona, while in Birmingham Alabama, Wells Fargo customers’ online banking accounts and ATMs displayed incorrect balances. The banks primarily affected were Wells Fargo, Chase and Bank of America, but according to blogger Phil Brennan, who studied Twitter feeds and other Internet message boards that were alight with the story, numerous other financial institutions were also affected, including US Bank, Compass, USAA, Suntrust, Fairwinds Credit Union, American Express, BB&T on the East Coast and PNC. “Twitter is going crazy with reports of ATMs and online accounts going down as of 01:00 hours EST of the 7th of November 2010,” writes Brennan. “This is happening to many banks all across America. Some are trying to say that it is a computer glitch to do with the change in Daylight Savings Time, but I will call BS on this as we manage to put our clocks back over here in the UK without knocking out ATMs and online accounts nationally.” Brennan questions whether the outages were the first warning shots in a move to “devalue the dollar,” just days after Federal Reserve chairman Ben Bernanke sparked an international currency war by announcing that the Fed will buy $600 billion of U.S. government bonds over the next eight months. Any perceived inability of banks to deal with a sudden demand for cash would undoubtedly place in peril the United States’ triple A credit rating and spark a fresh dollar crisis. “In the light of what is going on geopolitically, I am still very suspicious about the reasons for this mass downtime of ATMs and Online Accounts, adds Brennan. “There is still a very distinct possibility that November the 11th will turn into an extended Bank Holiday so I would advise all those who can get their money out of their banks to do so, even if you have to pay your upcoming bills manually.” As we reported last week, the “bank holiday” rumor has reared its ugly head once again, after a story emerged that a pastor was told by one of the managers of a prominent east coast bank that banks would close for an undetermined amount of time, and that when they reopened, “all withdrawals by checks would be limited to $500 per week – no matter what the balance in the account is.” Though the story is still an unconfirmed rumor, banks have been preparing for limiting withdrawals. As we reported back in February, Citigroup sent an advisory to its customers at the start of the year which stated that the bank reserved “the right to require (7) days advance notice before permitting a withdrawal from all checking accounts.” The advisory stoked fears that financial institutions were preparing for bank runs. Fresh food that lasts from eFoods Direct (Ad) While we still think this new bank holiday rumor will subside as the previous two did earlier this year and last, in the current economic climate it would be foolish not to keep at least a small amount of your savings in physical cash. The current financial turmoil has been likened with the post 1929 period, during which newly elected Franklin Roosevelt declared a “bank holiday” that lasted four days, therefore such a scenario is not without historical precedent. — Paul Joseph Watson is the editor and writer for Prison Planet.com. He is the author of Order Out Of Chaos. Watson is also a fill-in host for The Alex Jones Show. Watson has been interviewed by many publications and radio shows, including Vanity Fair and Coast to Coast AM, America’s most listened to late night talk show.

Bachmann letter to Obama: Investigate ACORN

By Joe Kimball | Published Mon, Sep 21 2009 2:03 pm

U.S. Rep. Michele Bachmann says today that she sent this letter to President Obama on the ACORN flap:

Dear Mr. President,

Last week, both the House and Senate voted to cut off federal funding to the Association of Community Organizations for Reform Now (ACORN) after videos emerged showing ACORN workers advising a couple on how to avoid taxes and seek HUD grants to set up a prostitution ring as a legitimate business. The American people were rightly outraged by this behavior and these motions passed with overwhelming bipartisan majorities, succeeding in the Senate by an 83 – 7 vote and the House by a 345 – 75 vote.

This is hardly the first time, however, that ACORN has made the headlines and the people have called for ACORN to be cut off from federal funds. In fact, there was a rather public debate about ACORN’s federal funding in the House in May when Financial Services Committee Chairman Barney Frank led an effort to strip my language from the Mortgage Reform and Anti-Predatory Lending Act (H.R. 1728) that would have kept ACORN from accessing federal funds under that legislation because of their continuing involvement in voter registration efforts that ended in criminal investigations, indictments, and consent decrees.

Given this context, it was disappointing to hear that this issue hasn’t made it to your radar screen. As you stated yesterday on ABC’s This Week, “It's not really something I've followed closely. I didn't even know that ACORN was getting a whole lot of federal money… It's not something I'm paying a lot of attention to.”

In point of fact, ACORN has received more than $53 million in direct federal funding since 1994, could be eligible for at least $8.5 billion more through the “stimulus” package and other government programs signed into law this year, and could be eligible for an additional $1.5 billion from a housing slush fund the House is considering. With all due respect, Mr. President, I know that you are exceedingly busy and have any number of issues competing for your time and attention, and I know that in the scheme of trillion-dollar-bills and record high deficits and debts even $10 billion may not seem like much; but every dollar the taxpayers send to Washington deserves our full care and attention. The issue of where we set the bar for accessing federal funds should be a gateway issue for us all, as we have a fiduciary duty to the American people. Taxpayer funding is a privilege that must be earned and it is our responsibility – the President’s and Congress’ – to ensure that only those who have satisfied the highest standards are eligible.

As I have written your Administration before, I again urge you to use your existing authority to stop the flow of federal tax dollars to ACORN immediately and ask that you direct the Interagency Suspension and Debarment Committee to open an investigation of ACORN and its affiliates. Established in 1986, this long-standing Committee, coordinated through the Office of Management and Budget in the White House, is responsible for examining whether individuals and organizations should be barred from accessing federal funding and is authorized to suspend those they determine have acted improperly. ACORN’s long list of investigations and indictments, and the fresh evidence of illegal conduct caught on video tape should provide you and the Committee ample reason to take this action.

The American people view ACORN’s pattern of criminal activities as a serious issue and you must hold this organization accountable for its actions. Thank you for your consideration of this request and I look forward to hearing from you.

Sincerely,

Michele Bachmann

Member of Congress

By Joe Kimball | Published Mon, Sep 21 2009 2:03 pm

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ACORN “7”

New Undercover Video! Beck and O’reilly Break Down the ACORN Scandal – A must see

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Census Bureau Severs Ties with ACORN

Chaos for My Glory: My Time With ACORN

The Obama-ACORN Anti-Gun Conspiracy

Video - Are SEIU and ACORN Forming Massive Organizations?

Acorn Cracked: Exposes ACORN’s Push for Socialized Medicine

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Conyers Backs Off Probe of ACORN

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Forrest Gump Explains The Banking Mess

Mortgage Backed Securities are like boxes of chocolates. Criminals on Wall Street stole a few chocolates from the boxes and replaced them with turds. Their criminal buddies at Standard & Poor rated these boxes AAA Investment Grade chocolates. These boxes were then sold all over the world to investors. Eventually somebody bites into a turd and discovers the crime. Suddenly nobody trusts American chocolates anymore worldwide.

Hank Paulson now wants the American taxpayers to buy up and hold all these boxes of turd-infested chocolates for $700 billion dollars until the market for turds returns to normal. Meanwhile, Hank’s buddies, the Wall Street criminals who stole all the good chocolates are not being investigated, arrested, or indicted.

Mama always said: ‘Sniff the chocolates first, Forrest’.

Quote of the day from a fund manager:

“This is worse than a divorce… I’ve lost half of my net worth and I still have my wife…”

The bailout–a different perspective:

Back in 1990, the Government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it. They failed and it closed. Now we are trusting the economy of our country to a pack of nit-wits who couldn’t make money running a whore house and selling booze?

Posted in Banking, Nationalization, politics at 9:11 am by Administrator - 01.20.09

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