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 onÂ Jesse’s Cafe AmericainÂ blogspot, â€œWarren Pollock and Ann Barnhardt On the Increased Risk to Customers In the US Financial System,â€ that illustrates how the US bankruptcy laws now enable theft brazen theft of customer funds by the largest banks.
â€œBasically, 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 Â CERTAINTY that customers’ funds were being repledged. Â 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. Â Spread the word.â€
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. Â 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. Â 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 financialÂ adviser.