Your bank deposits, who's money is it?

Ohioan

Well-Known Member
An interesting read,

https://thehutchreport.com/your-bank-account-who-really-owns-the-money-hint-its-not-you/

Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay.


In general, unsecured creditors, such as depositors of a bank, will have very little redress to cover their debts if a company is put into liquidation. The courts will not deal with the question of which class of creditor should have priority over other classes in such circumstances.


In the case of banking, it indicates the limited responsiblity of a bank towards depositors once the bank has the money put into its account. The principle illustrates that the relationship between the depositor and the bank is not one of principal and agent, where the bank as an agent acts on behalf of the principal and their interests. The money deposited in an account is no longer deemed as belonging to the principal but rather to the bank.


The money paid into the banker’s is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker’s money; he is known to deal with it as his own; he makes what profit of it he can, which profit he retains to himself. (Banking Regulation of UK and US Financial Markets – By Dr Dalvinder Singh)
 

LisaJoe1986

Well-Known Member
So when Uncle Sam direct deposits my Social Security payments into my credit union account they aren't mine. Joy! It's kind of them to let me spend it, huh. I hope they never get sticky fingers.
I am glad the mortgage company lets me and my family live in their house. This is what I tell people asking me, "Do you rent or own?" when I fill out paperwork. I think we might own a bathroom and the hallway now. I can't imagine living in a world that is not controlled by greed.
 

Tall Timbers

Imperfect but forgiven
I don't use banks. I use credit unions. No hidden fees.
My daughter had an account with a local credit union because she had a credit card issued by them. She used the account to pay the credit card bill. She stopped using that card because every time she'd try to use it she got a fraud alert. After a year of not using the account they started taking $10 a month maintenance fee out of the account until the account was drained. Thankfully she only had about $60 in the account when the draining started. This is a small town. I expect that type of behavior from, say, Wells Fargo, but not a small town Credit Union. I asked them to return her money. The Supervising person wouldn't budge. I also have an account with them. I had them cut a check for most of the money I had with them and mailed it off to another institution where I have an account. I'd leave entirely but I like to have a little money locally, just in case, and although they're not competitive with banking interest rates nationally, They're about double thee next best option in town, so I'm keeping a small amount with them for now.

I didn't know of that fee and I've had accounts dormant for over a year with other institutions and I never got surprised with a fee. Since my daughter wasn't using the account, she wasn't monitoring it... she finally noticed some time after it zeroed out. It may have been legal for the Credit Union to do that, but I think it is just as wrong as a thief taking a wallet.
 

Ohioan

Well-Known Member
What about the FDIC?
Your question is answered deeper in the article and unfortunately it is not good news,



There are still, however, people who choose to doubt this and claim that depositors are not creditors. All we have to do is to look at the “Depositor Preference Rule.” A depositor preference rule requires that in the insolvency of a bank, the claims of depositor’s enjoy a privileged status. A majority of G-20 countries have some form of depositor preference rule, including Australia, Switzerland and the United States. An increasing number of European countries which have undergone, or are undergoing, EU/IMF programmes, including Greece, Portugal, Hungary, Latvia and Romania, have introduced depositor preference regimes. In the U.S., among unsecured creditors, the claims of the insolvency administrator rank first, and the depositors rank ahead of tax and employee compensation claims. Otherwise said, this states that the depositors do have to stand in line to get back money that the bank owes them (not the money that they think is theirs in a bank account!).


Previously the bank was obligated to pay the depositor’s money back on demand in the form of cash. According to the 15-page FDIC-BOE document called “Resolving Globally Active, Systemically Important, Financial Institutions”, IOUs will be converted into “bank equity.” The bank will get the money and the depositor will get stock in the bank. With any luck the depositor may be able to sell the stock to someone else, but when and at what price?


Why does it matter? Because if the bank’s IOUs are converted to bank stock, they will no longer be subject to insurance protection by the FDIC, but will be “at risk” and vulnerable to being wiped out, just as the Lehman Brothers shareholders were in 2008.
 

Ohioan

Well-Known Member
What about the FDIC?
Another well written article to further answer your question,

https://www.moneymetals.com/news/2015/04/15/fdic-plots-a-bank-heist-involving-your-accounts-000694

Instead of a "bailout" that is paid by the taxpayer they have gone to a new instrument of a document called the "bail in" in which you become the
unsecured creditor once you deposit your money in the bank , now when the bank becomes "insolvent" the bank conducts a"BAIL IN" which is borne by the depositor instead of the taxpayer.
 

Cindy S.

When he comes, will he find faith? Luke 18:8
Oh do not count on them not getting sticky fingers. A year or two ago there were some countries, European I think, where the governments simply helped themselves to a portion of the account of every depositor who had over a certain amount.
I like to keep paper copies of statements and also of my 401k, so if a time comes and the balance isn't right, I have PROOF what it should be.
 

Mish

This world is not my home!
An interesting read,

https://thehutchreport.com/your-bank-account-who-really-owns-the-money-hint-its-not-you/

Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay.


In general, unsecured creditors, such as depositors of a bank, will have very little redress to cover their debts if a company is put into liquidation. The courts will not deal with the question of which class of creditor should have priority over other classes in such circumstances.


In the case of banking, it indicates the limited responsiblity of a bank towards depositors once the bank has the money put into its account. The principle illustrates that the relationship between the depositor and the bank is not one of principal and agent, where the bank as an agent acts on behalf of the principal and their interests. The money deposited in an account is no longer deemed as belonging to the principal but rather to the bank.


The money paid into the banker’s is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker’s money; he is known to deal with it as his own; he makes what profit of it he can, which profit he retains to himself. (Banking Regulation of UK and US Financial Markets – By Dr Dalvinder Singh)
:thankyou for sharing this article with us! I have learned a lot and appreciate being educated on this subject!

I have a question, if y’all don’t mind me asking? Paralleling this thought, could the same be true for financial management companies? Perhaps I don’t understand this correctly, but I have always believed these companies benefit from more than just fees (buying/selling stock fees + management fees). These large management firms have a lot of employees, thus salaries and benefits costs are incurred (like most companies) as part of the normal process of running a company. Having said that, my question is this: Are these financial management companies making their profits based solely on customer fees OR do they use customer’s money to also increase profits for their company?

I don’t know the answer, but have always felt they use the totality of customers’ capital (just like the banks) to generate an additional form of revenue over and above the individual fees paid by investors. :scratch :confused :hmmm

If anyone can shed some light on this, I would really appreciate it greatly!:thankyou
 

TimeWarpWife

Well-Known Member
Let's be honest, we don't really own the money in "our" bank accounts any more than we own our homes when the mortgage is paid ~ don't pay the real estate taxes and see how fast the county or city owns your house. :doh We're still basically lifelong renters even after we've paid the mortgage company in full for the price of the house.
 

Joseph The Carpenter

Well-Known Member
If you don't hold it you don't own it.
As for big banks verses local banks in 2008 small banks were allowed to fail and mega banks were "to big to fail".
Today they are even bigger.
I only keep enough money in the bank to cover a few months bills.
Most likely the reset will happen shortly before or after the Rapture.
 
Top