capital-controls

Tyler Durden of ZeroHedge warned us that when bankrupt insolvent governments “run out of fingers to plug the dikes,” history shows that they fall back on a very limited playbook. Simon Black of Sovereign Man blog enumerated 8 steps in the playbook of bankrupt governments (see my post of April 3, 2013: “How bankrupt govt steals your money in 8 steps”):

  1. Direct confiscation (the Cyprus model)
  2. Taxes
  3. Inflation
  4. Capital controls
  5. Wage and price controls
  6. Wage and price controls on steroids
  7. Increased regulation
  8. War and national emergency

The 2013 Great Cyprus Bank Robbery was our first wake-up call. In debt up to its eyeballs, Cyprus’ government made a deal with their Eurozone financial masters to confiscate steal 80% of “large” bank deposits.

At the time, I warned that Americans should be on the alert to copycat moves by our feral government and bankers, all the more because the American Left actually applauded the theft of Cypriots’ bank savings.

take our poll - story continues below

Should the Government be Mandating Masks?

  • Should the Government be Mandating Masks?  

  • This field is for validation purposes and should be left unchanged.
Completing this poll grants you access to DC Clothesline updates free of charge. You may opt out at anytime. You also agree to this site's Privacy Policy and Terms of Use.

The signs are accumulating that we are approaching Step #4: Capital controls. Banks are “testing the waters” on preventing a bank run.

Three months ago, on October 17, 2013, reports came that Chase Bank, one of the Big Four banks in the United States announced that, in a month, it would (a) ban international wire transfers and (b) limit all banking transactions, including cash withdrawals, to no more than $50,000 per month.

After the information went viral, Forbes obtained a clarification from Chase that (a) the restrictions apply “only” to small business accounts; and that (b) those accounts can free themselves of the restrictions by upgrading to Chase’s Performance Business Checking where there’s no cash activity limit, and international wires are available for an additional fee.

Forbes then dismissed the changes instituted by Chase as “more about Chase looking to generate more revenue from fees than an attempt to control capital.” Ha Ha Ha Ha.

Now, it’s HSBC.

HSBC_global_locations

HSBC is one of the world’s largest banks; a British multinational banking and financial services company headquartered in London. (The HSBC name is derived from the initials of the Hongkong and Shanghai Banking Corporation. The bank had originated in Hong Kong and Shanghai, where branches were first opened in 1865.)

Three days ago, on Jan. 24, 2014, BBC reported that HSBC customers have been prevented from withdrawing large amounts of cash, £5,000 to £10,000 ($8,282 to $16,562), because they could not provide a “satisfactory” explanation for their withdrawal. 

Imagine that: A bank demands to know why you want to withdraw YOUR money! And if the bank does not approve of your reason, then it refuses to give you YOUR money!

Adding insult to injury, HSBC admitted it has not informed customers of the change in policy, which was implemented in November.

Here’s the experience of one HSBC customer, Stephen Cotton:

Cotton went to his local HSBC branch this month to withdraw £7,000 ($11,593) from his instant access savings account to pay back a loan from his mother. A year before, he had withdrawn a larger sum in cash from HSBC without a problem. But this time it was different. As he recounts it: “When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved.”

Cotton says the staff refused to tell him how much he could have: “So I wrote out a few slips. I said, ‘Can I have £5,000?’ They said no. I said, ‘Can I have £4,000?’ They said no. And then I wrote one out for £3,000 ($4,968) and they said, ‘OK, we’ll give you that.’ “

You Might Like

Cotton then asked if he could return later that day to withdraw another £3,000, but he was told he could not do the same thing twice in one day.

A day later, on Jan. 25, 2014, faced with a furious backlash against its unannounced restriction on cash withdrawals, HSBC backed off.

As reported by Tyler Durden for Zero Hedge, while insisting that the restriction was for your own good — “to protect our customers” — HSBC nevertheless rescinded its policy and issued this statement:

Statement On Large Cash Withdrawals

25 Jan 2014

As a responsible bank we ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account. Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for. The reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime. Large cash transactions have inherent security issues and leave customers with very little protection should things go wrong, by asking customers the right questions, we can explore whether an alternative payment method might be safer and more convenient for them.

However, following feedback, we are immediately updating guidance to our customer facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal. We apologise to any customer who has been given incorrect information and inconvenienced.

H/t FOTM’s swampygirl

See also “Is it true banks won’t let you withdraw cash?,” Oct. 23, 2011.

~Eowyn

Dr. Eowyn is the Editor of Fellowship of the Minds.