Do U.S. laws passed by Congress allow banks to steal your money? The answer appears to be yes according to an article on ZeroHedge:
There is a very important article on Jesse’s Cafe Americain blogspot, “Warren Pollock and Ann Barnhardt On the Increased Risk to Customers In the US Financial System,” that illustrates how the US bankruptcy laws now enable theft brazen theft of customer funds by the largest banks.
“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. Spread the word.”
So if you put your money in the wrong place, it can essentially be “stolen” to help shore up the finances of a bankrupt financial system.
What are somethings you might consider to help protect your money?
First, no customer should EVER use a broker-dealer as custodian, either for securities or cash. The 2005 bankruptcy reform legislation and the Seventh Circuit decision make clear that customers of a broker dealer have no legal protection from the predatory behavior of the large banks that clear for these firms.
Second, no customer should maintain funds in a depository about the FDIC insured limit if that bank has a broker dealer subsidiary. Based on my reading of the Seventh Circuit decision, it is entirely possible for a bank to place a broker dealer affiliate into bankruptcy and then raid the customer accounts to protect the bank.
Keep in mind that this is not financial advice. Please talk to your financial adviser.