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Do New Banking Laws Make You Nervous?
By Patrick A. Heller
July 08, 2013

On June 26, the European Union finance ministers agreed on a plan that would require a bank’s shareholders and creditors (including those with account balances deposited with the bank in excess of the “insurance” protection) to take losses in the event that the bank becomes insolvent or bankrupt. Although it may take until 2018 for this plan to take full effect, the plan is to implement as many parts of this program as quickly as possible.

Forcing bank account holders to surrender part of their accounts when a bank fails did not start on March 13, 2013, when many bank customers in Cyprus had sizeable amounts seized out of their accounts. The plan to seize funds from bank accounts was proposed by the Financial Stability Board (part of the Bank for International Settlements) in October 2011.

This plan was endorsed at the G-20 summit in December 2011, though such approval was only a formality. Previously, in 2009, the G-20 nations agreed to be regulated by the Financial Stability Board.

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So, beyond the 28 nations of the European Union, policies to seize funds out of bank customers’ accounts is already established in Australia, Canada, New Zealand - and the United States.

However, bank account holders in the United States should not feel complacent that their bank balances may be below the limits of coverage set by the Federal Deposit Insurance Corporation (FDIC). As of June 30, 2011, FDIC only has $3.9 billion in a fund to cover $6.54 trillion of insured deposits. That is only 0.06 percent coverage.

In theory, the FDIC could borrow from the U.S. Treasury to help cover “insured” losses. However, the Dodd-Frank Act in Section 716 bans taxpayer bailouts of the most speculative derivatives activities.

The problem is that derivatives claims have a “super-priority” in event of bankruptcy, meaning they are paid off before other claims. Both JPMorgan Chase and Bank of America each hold derivatives with notional values exceeding $70 trillion. If either of these banks becomes insolvent or goes bankrupt, there will likely be no funds available to cover any “insured” bank balances.

So, collectors, it may be prudent to make sure that you have some precautions in place. You might want to establish your bank accounts with institutions that do not get involved with trading any derivatives. Further, you might want to have physical custody of more than just the coins and paper money in your numismatic holdings. If you can hold at least enough spending money to cover one to two months of expenses, you will know at least that much will never be seized out of your bank account.

Patrick A. Heller is the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich.,” and writes “Liberty’s Outlook,”, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at Other commentaries are available at Coin Week ( and He also writes a bi-monthly column on collectibles for “The Greater Lansing Business Monthly” ( His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at

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On July 9, 2013 don verin said
I count only 370 coins being offered.Maybe
only 5 items.There are not 1420 items in this article.


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