ARE YOUR RRSP’s SAFE?

Click on the link above to hear Part 2 of my series on Stephen Harper and The Canadian Banking System. Please also read the accompanying text.

No, not really. Not in today’s bail-in banking rules. But first, in last week’s post I said that anything over ten thousand dollars in a Canadian bank account could now be prey to confiscation by the banks in case of an international bank melt down under the new “bail-in” rules. I was reminded by viewers that the Canadian Deposit Insurance Corporation insures deposits up to one hundred thousand dollars. So the feeling of many is that any Canadian depositor can feel secure if their bank accounts are under the one hundred thousand limit of insured deposits. Right? Well, that depends.

On April 3, 2013 on CBC Neil Macdonald, as Senior Washington Correspondent for the CBC report, said “It boils down to this: Ottawa is contemplating the possibility of a Canadian bank failure-and the same sort of pitiless prescription that was imposed on Cypress…while officials in Ottawa are playing down the possibility of a raid on the bank accounts of ordinary Canadians, they chose not to include that guarantee in the budget language”. Let’s think about that for a moment. Ottawa chose not to include that guarantee in the budget language. And then Mr. Macdonald goes on to explain that: “as the Cypress meltdown proceeded (2013) it became clear that Europe’s finance ministers and
central banks, encouraged by the International Monetary Fund, were not only willing to freeze and seize uninsured deposits over 100 thousand euros, they were also initially willing to cancel deposit insurance and go after small deposits, too.

In the end the plan was rewritten and insured deposits were protected, but the signal had been sent. The Europeans and the IMF had been prepared to do the unthinkable. That is to cancel any insurance plans for under one hundred thousand euros and to go after the smaller deposits, too. And we are reminded that Christine Lagarde, head of the IMF, was prepared to seize a portion of all deposits in Cypress, insured and uninsured. So was the European Central Bank, and so were Europe’s
finance ministers. Collectively they were like ducks on the backs of unsuspecting June bugs. But in this same CBC report, Macdonald tells us about a speech given by departing central banker Mark Karney who supported such a system (bail-in) and then of remarks by Craig Alexander, chief economist at TD Canada Trust who says that “this kind of a system would make the banks stronger” and then added: “he also notes that many Canadians believe, mistakenly, that their RRSPs and other holdings are safe and insured, up to the one hundred thousand dollar threshold. They don’t realize that government bonds as well as stocks and mutual funds are among the investments that don’t
qualify for CDIC”.

This to me is truly shocking that RRSP’s are not insured by the Canadian government. I think it might shock a lot of other Canadians, too, many who are banking these RRSPs and banking on them for future security. But you know, this raises a much larger question in my mind… Why do all these provisions that are so grossly unfair to everybody but the banking system and those in finance who stand to profit from a banking meltdown, seem to suggest that a banking crisis might be imminent, one worse than the last one? Otherwise why would the international banks all be huddling together legalizing the right of western and European banks to seize depositor’s money in case their
stupid greed causes another massive banking failure?

Sometimes I’m accused of seeing connections where none may exist, but human society is in nature, so to speak, and it evolves like nature, and in nature everything is connected. I don’t like to think this, but I think it nevertheless…that there may also be a direct connection between a sooner rather than later bank melt-down and so many of Harper’s top people jumping ship and refusing to run in the upcoming election. Could they all be trying to escape an ugly, ugly bank melt down on their watch? Especially with Greece in the throes of a melt-down? More on these connections next time.