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Garbage In Greenbacks Out-- The New GIGO!

Here's How The Scam Works

-by Dorothy Reik

"They asked me for collateral, and I pulled down my pants."

-Bob Dylan, from one of the greatest songs in the history of teh English language

Dylan had better collateral than the crypto creeps who got the FDIC to reimburse them for their deposits. [On the other hand, Dylan never had scores of members of Congress in his debt.] Here's how the scam works. First, you have to understand that crypto is worthless until you convert it into real money. There's no "there" there. It's make-believe, smoke and mirrors! It's for financing criminal enterprises. So you did some dirty deal-- sold a bunch of fentanyl, for example, and got paid in crypto-- $500,000 or so. OK-- so you take the crypto to SVP, or Signal Bank, or wherever, and use it as collateral for a loan-- like you would a house or a car! You can borrow half the value of the crypto-- $250,000. Then you deposit the money in the very bank that made you the loan! Bingo! It's insured! It's real money! You can even spend it! "But wait!" you say-- "What about the other $250,000?" Well, the fentanyl only cost you $5,000 so WTF!

SVB made other bogus loans-- like loans on stock in start-ups with no income. That money was also deposited in SVB and turned into real cash which the FDIC happily gave back to the start-up owners-- what was left after they bought mega-mansions and Ferraris with some!

The scheme could have gone on forever but when the interest rates went up and the bank's only safe investment, long term treasury bonds, tanked, the big boys got scared-- they had real money at stake-- so 200 of them in a twitter group decided to bail to the tune of $42,000,000,000-- yes, that many zeroes! The banks' executives saw it all coming-- they sold their stock, took big bonuses and ran. We will see if any of that money gets clawed back and put into the FDIC pot.

Meanwhile the big winners are-- wait for it!-- the TOO BIG TO FAIL Wall Street banks.

Related: Last Thursday, Adam Schiff introduced the Deliver Executive Profits on Seized Institutions to Taxpayers (DEPOSIT) Act to combat corporate greed with accountability. If signed into law, his legislation, co-sonsored by Mike Levin (D-CA), Jim McGovern (D-MA), Betty McCollum (D-MN), Raúl Grijalva (D-AZ), John Garamendi (D-CA), Chellie Pingree (D-ME), Mark Takano (D-CA), Bonnie Watson Coleman (D-NJ), Jimmy Gomez (D-CA) and Kevin Mullin (D-CA), would:

• Recoup from bank executives the bonuses and profits from stock sales made within 60 days of a bank failing

• Impose a 90% tax on the bonuses of bank executives who make an annual income over $250,000 during the year when a bank goes under FDIC acquisition

• Require bank executives to forfeit 100% of profits they made from recent bank stock trades

• Direct the recouped funds to the FDIC insurance fund so that it can be returned to depositors and used to pay workers and small businesses that were impacted

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