Is your bank account safe?

It would seem that not only do the Green Party offer us hope for the environment and the future of the planet but they also offer us a better and wiser way of protecting our savings. Most of us have our income paid directly into a bank account of some sort and rely on the fact that that bank is both secure and sound in its operation.

Most other countries make sure that banks have some type of insurance cover that securers its deposits especially it’s smaller account holder.

The government in Cyprus has just rejected an effort by the ECU to take money from private account holders in Cyprus to bail out its banks.

Blogger No Right Turn said the following:

The Cypriot Parliament has voted against the German-imposed bank robbery, with not a single MP voting in favour. While the plan had been modified to exclude smaller deposits, that wasn't good enough, and tellingly not even government MPs voted for it - they all abstained. I guess the crowds gathered outside Parliament made it quite clear what the consequences of robbing them would be.

So, the EU/IMF's bluff has been called: they can either pony up more money, or let Cyrpus default or risk it taking down the rest of the Eurozone. Let’s hope they're not gamblers.

Meanwhile, this is the first real democratic pushback against EU/IMF austerity. Long may it continue?

The Greens and NZ First have stated their opposition to the National Governments plans.

Press Release: Green Party 

19 March 2013

National planning Cyprus-style solution for New Zealand

The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors, will overnight have their savings shaved by the amount needed to keep the bank afloat…

“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”

Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250, 000,” Dr Norman said.

“OBR is not in line with Australia, which protects bank deposits up to $250,000.

“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

Deposit insurance will, however require the Reserve Bank to oversee and regulate our banks more closely A  measure which is ultimately the best protection against bank failure.

The NZ First Party released this PR on the same issue:

PROTECT THE SAVINGS OF NEW ZEALANDERS

New Zealand First is calling for the introduction of a bank depositors’ guarantee scheme to protect the savings of blameless Kiwis during any financial crisis;

The policy would provide a government guarantee for deposits of up to $100,000 in New Zealand-owned banks.

The call comes as the Reserve Bank moves to adopt measures that would, under certain financial circumstances, allow it to take a portion of bank deposits from New Zealanders accounts.

A similar policy has caused public outrage and panic in Cyprus as that country works towards a Eurozone-endorsed bailout.

Rt Hon Winston Peters says the possibility that a New Zealand financial crisis and subsequent bailout could hit the savings of innocent, hard-working mums and dads is not the Kiwi way.

“Why take money off innocent New Zealanders who have simply used a bank in which to store their hard-earned money?

“Essentially that would see innocent New Zealanders being financially penalised for something that wasn’t of their making.

“That sort of scenario is never acceptable in a court of law so why make it part of the Reserve Bank’s policy,” says Mr Peters.

This is a very serious matter and we should never forget that the greatest percentage of our banks are overseas owned.