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“Back of the Line, Dummy!” Hidden Law Shafts Small Investors.

Written by Gary North on December 7, 2011

When a big firm like MF Global goes under, taking investors’ funds with it, the investors will probably not get paid. The people of the other side of derivatives (futures) contracts will.

Recently Bank of America transferred a bunch of derivatives into their banking arm.  “A bunch” means somewhere around $80 trillion worth.

Now pay very careful attention, because part of the bankruptcy “reform” law in 2005 placed derivative claims in front of depositors in a business failure – including a bank failure.

What JP Morgan is claiming in the MF Global case is that the derivative trade (which is exactly what a “Repo to Maturity” trade is – it’s a derivative) is entitled to preference in the case of MF Global over those who had cash there for safekeeping either as a margin deposit or just as free cash as you would hold free cash in a bank.

This means that the Big Boys are placed at the front of the line. You, a small guy, will be  way in the back. You are going to get nothing.

But what if you pull your money out before the bankruptcy? Sorry, Charlie!

If a major bank blows up this very same claim, supported in existing Bankruptcy Law with the changes signed by George Bush in 2005, will be used to steal the entirety of your bank account, and if you detect the impending blowup shortly before it happens — say, 90 days before — you’re still exposed to the risk through clawback!

Clawback is where creditors are given the right to get money back from investors who saw what was coming and cashed out.

Here is the problem.

A cascade failure of several large banks would easily result in loss claims that would exceed the entire US GDP; for obvious reasons virtually none of that would actually be paid or recovered and in the case of you, the average person, your reasonable expectation of recovery in such an event is zero.

My assessment is this: Congress will not let depositors at FDIC-insured banks lose their place at the front of the line. But in an account not insured by the FDIC, your money is at risk.

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12 thoughts on ““Back of the Line, Dummy!” Hidden Law Shafts Small Investors.

  1. Victor Barney says:

    Isn't it nice to know without the Hitler supporting Bush's during WW 11, we probably wouldn't have had this current marxist(Anti-Christ, as it's caliphate partner by definition, Islam) takeover of America! I've come to the conclusion that ALL Hollywood or where ever they got to act now is Marxist, which is why James Arness of Gunsmoke didn't pass on the torch as John Wayne did to him! I've recently learned on the "Earth" channel, of all places, that the earth has very significant changes in it's environment every 2,000 years and it's time for another major environmental change to take place on earth in 2012! Did I also mention that due to planetary alignment, etc. all the signs will be in the sky that is found in Revelation, chapter 11 during the reign of Yahshua's two-witnesses who come to severely punish u.s. for 3 1/2 years before his return? September 16, 2012 should be just amazing! Just saying…

  2. We Americans are being foolish children……we should all, to a man, pull cash from the banksters,turn it into gold coins, sit back and watch them squirm. That's what they do to us. Let,s make say a week in March, a no fly week, and they can keep paying the T.S.A. criminals in funny money while the airlines put a stop to that nonsense in their own interests.
    It,s time for real Americans to get tough on the criminal class in D.C. We should also consider a "no pay tax day", since Harry Reid tells us it's a voluntary pay in. At the very least, claim ten dependants and let the criminal class wait on their $$$

  3. Luke 10:18And he said unto them, I beheld Satan as lightning fall from heaven.
    In ancient Hebrew the word for lightning is barack, the word for heaven or the
    heights is bama and to connect the words either an “a” or an “o” is used.

    2 Thessalonians 2:3 (King James Version)
    3Let no man deceive you by any means: for that day shall not come, except there
    come a falling away first, and that man of sin be revealed, the son of perdition;

    Political Correctness a term first seen in Mao’s Little Red Book, a communist engendered abomination that is instituting censorship little by little.

    “If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter.”- George Washington

    Carl Marx, once wrote that, the goal of the Communists was to quote,. “enter into men’s minds and cast God down from his throne.”

    Matthew 12:31Wherefore I say unto you, All manner of sin and blasphemy shall be forgiven unto men: but the blasphemy against the Holy Ghost shall not be forgiven unto men.

     

    In ancient Babylon their economy was based on usury.
    “If you lend money to one of my people among you who is needy, do not be like a moneylender; charge him no interest. Exodus 22:25
    Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live: he hath done all these abominations; he shall surely die; his blood shall be upon him. Ezekiel 18:13
    Usury is unlawful; expressly prohibited by GOD!
     Article 1 Section 8 of the U.S. Constitution clearly states that only the Congress can print and coin money! 

    The Federal Reserve Act of 1913 was slipped thru congress during the Christmas break with the majority of it’s members absent. 

    The Federal Reserve is self serving and privately owned in violation to the Constitution, charging interest on illegally printed money. Money printed from nothing!
    In America On June 4, 1963, a virtually unknown Presidential decree, Executive Order 11110, was signed with the authority to basically strip the Federal Reserve Bank of its power to loan money to the United States Federal Government at interest. With the stroke of a pen, President Kennedy declared that the privately owned Federal Reserve Bank would soon be out of business. Five months later A UNITED STATES PRESIDENT, PRESIDENT JOHN F. KENNEDY was MURDERED BY COMMUNIST!
    “If you lend money to one of my people among you who is needy, do not be like a moneylender; charge him no interest. Exodus 22:25
    Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live: he hath done all these abominations; he shall surely die; his blood shall be upon him. Ezekiel 18:13
    Usury is unlawful; expressly prohibited by GOD!
     
     
    In ancient Babylon their priest sacrificed babies to their gods baal, and molech.  
    In America the communist under their socialist programs have sacrificed over 50 million American babies to their god satan!
    Leviticus 20:2-5
    2Again, thou shalt say to the children of Israel , Whosoever he be of the children of Israel , or of the strangers that sojourn in Israel , that giveth any of his seed unto Molech; he shall surely be put to death: the people of the land shall stone him with stones.
    3And I will set my face against that man, and will cut him off from among his people; because he hath given of his seed unto Molech, to defile my sanctuary, and to profane my holy name.
    4And if the people of the land do any ways hide their eyes from the man, when he giveth of his seed unto Molech, and kill him not:
    5Then I will set my face against that man, and against his family, and will cut him off, and all that go a whoring after him, to commit whoredom with Molech, from among their people.
     
    Luke 22:35-36 Then Jesus asked them, “When I sent you without purse, bag or sandals, did you lack anything?” “Nothing,” they answered. 36 He said to them, “But now if you have a purse, take it, and also a bag; and if you don’t have a sword, sell your cloak and buy one.
     
     
    Jeremiah 50:16Cut off the sower from Babylon, and him that handleth the SICKLE in the time of harvest: for fear of the oppressing sword they shall turn every one to his people, and they shall flee every one to his own land.
    Jeremiah 50:23How is the HAMMER OF THE WHOLE EARTH CUT ASUNDER AND BROKEN! how is Babylon become a desolation among the nations!
    BABYLON = the HAMMER and SICKLE!
     
     
    Jeremiah 50:14 “ Put yourselves in array against Babylon all around, All you who bend the bow; Shoot at her, spare no arrows, For she has sinned against the LORD.

    All nations compassed me about: but in the name of the LORD will I destroy them. Psalm 118:10

     

    “The thing that separates the American Christian from every other person on earth is the fact that he would rather die on his feet, than live on his knees!”. George Washington

    “NO KING BUT KING JESUS!”
            

     

  4. EyesWideOpen says:

    Same ols song and dance – steal from the poor and give it to the rich. I'm beginning to believe that linch mobs have their place and purpose!

  5. EyesWideOpen says:

    My comment was censured by The Tea Party! The champions of the Constitution? I think not!
    The comment was not racist or inflammatory!

  6. A thief is a thief no matter what color coat he wears. They can bury their fleecing activities as many levels as they want to no avail. A small investor is not placing his money for ultimate confiscation. Cash is as liquid as you can get yet, the criminals claim to have found a way around that. The major lesson here is don't invest in anything that does not directly benefit you. Even if you invest in your own company, it is a constant battle to keep the government from taking all of it.

  7. […] The small investor will get nothing or close to nothing. The big boys win, and if you try to save your bank account, even up to 90 days before the implosion of whatever company it is, they can still come and take your money. For more details: TP Economist […]

  8. Geoge Bush is still alive why ?

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