Part II will look at the derivatives risk that could trigger the next global financial crisis. The problem is that depositors are classed as “creditors.” So how big is the risk to your deposit account? Part I of this two part article will review the bail-in issue. Financial podcasts have been featuring ominous headlines lately along the lines of “ Your Bank Can Legally Seize Your Money” and “ Banks Can STEAL Your Money?! Here’s How!” The reference is to “bail-ins:” the provision under the 2010 Dodd-Frank Act allowing Systemically Important Financial Institutions (SIFIs, basically the biggest banks) to bail in or expropriate their creditors’ money in the event of insolvency.
