Will Federal Government react to People vs. Banks?

[onlythetruth]

VANCOUVER, BC, Aug. 24 /CNW Telbec/ - Almost five months to the day of the initial filing of the biggest class action suit in Canada, John Ruiz Dempsey on Behalf of the People of Canada versus Envision Credit Union, Laurentian Bank, CIBC, Royal Bank, Bank of Montreal, TD Canada Trust, The Canadian Payment Association and others, the lawyers representing the financial institutions are gathering steam to try to stop John Ruiz Dempsey, a criminologist and forensic litigation specialist from proceeding with their application to the court to strike Mr. Dempsey's statement of claim in whole or in part. Hearings are set for September 12 and 13 at the Supreme Court in Vancouver. The statement of claim alleges among other things, creation of money out of nothing, fraudulent misrepresentation, money laundering, fraud, charging of criminal interest rates and breach of contract. A copy of the Statement of Claim is available for download through http://www.freewebs.com/classaction/ .

"This without a doubt will be a precedent setting case, that is sure to change the face of the banking system in Canada forever. Without even taking into consideration the potential damages, the sheer numbers of people alone who potentially can participate in this action, will in my estimation make this case the largest lawsuit ever filed for Class Certification in this nation", stated John Ruiz Dempsey.

The banks are being represented by two of the largest law firms in Canada such as Borden Ladner Gervais with 670 lawyers and Fasken Martineau Dumoulin with 500 lawyers. This is clearly a David and Goliath case where these lawyers are moving to tread heavily on Mr. Dempsey and the People of Canada he represents.

News Conferences are currently being arranged and will be held September 9 in Vancouver and Montreal. Various citizen freedom movements and other special interest groups representing thousands of Canadians from across Canada are expected to rally in support of this action

http://www.fourwinds10.com/news/05-governm...-the-banks.html

[Toro]

You have got to be kidding.

These people have no idea whatsoever how banking, economics and monetary policy works. I mean, none at all.

[mcqueen625]

You have got to be kidding.

These people have no idea whatsoever how banking, economics and monetary policy works.  I mean, none at all.

<{POST_SNAPBACK}>

And the banks don't lend out money that they do not have in reserve? THey don't lend out money that exists only on paper?

In a book I read written by former Finance Minister Paul Helyer, he states that is exactly what the Charter Banks have been allowed to do by governments. At one time the banks used to have a reserve, but the amount of that reserve has been allowed to go down to the point that it either doesn't exist at all anymore, or it is only a pittance of what would be needed if there was a run on the banks. The banks have virtually moved us to a virtually cashless society where paycheques often consist of nothing more that a piece of paper with virtual numbers on it. If everyone decided to withdrawn their supposed on-deposit funds from their banking institutions at the same time the whole system would come crashing down. Banks would have to close their doors or risk riots when the peole actually realized that these banks do not have most of this money to pay-out. This virtual money when deposited is virtually lent out numerous times in the form of mortgages, bank loans, lines of credit, and credit card debt. The reality is that these banks are making obscene profits on money that they do not actually possess, and our governments have allowed this to happen.

[mirror]

I agree.

Good ole corporate greed and in collusion with our Canadian governments here.

[Riverwind]

If everyone decided to withdrawn their supposed on-deposit funds from their banking institutions at the same time the whole system would come crashing down.

This has always been the case with banks even when reserves were required at higher levels. In any case, if a bank gives you a mortgage for 5% they do not make the entire 5% as income since they have to borrow the funds from the BOC at the prevailing rates. This means they only make money on the spread between what the BOC charges and what they charge the consumer. This is a very important thing to understand: the banks do create money from nothing but it costs them money to do so, as a result, they have an incentive to ensure the money is used in productive investments. If the BOC allowed banks to create money from nothing without any associated cost then the BOC would have absolutely no control over the money supply.

[mirror]

This should never have been allowed to get into the private sector hands who do nothing else but rip off Canadians from coast to coast. If we had a government in Ottawa that really represented Canadians, rather than their corporate buddies, they would put a stop to this overnite.

[Riverwind]

This should never have been allowed to get into the private sector hands who do nothing else but rip off Canadians from coast to coast. If we had a government in Ottawa that really represented Canadians, rather than their corporate buddies, they would put a stop to this overnite.

Such a gov't would destroy the financial system in the country overnight. There is nothing wrong with allowing private banks to make decisions which businesses and individuals need credit - especially if they are held financially responsible for mistakes. Do you believe that companies should be prevented from issuing stock? Because that is just another way of creating money out of nothing.

[Toro]

You have got to be kidding.

These people have no idea whatsoever how banking, economics and monetary policy works.  I mean, none at all.

<{POST_SNAPBACK}>

And the banks don't lend out money that they do not have in reserve? THey don't lend out money that exists only on paper?

In a book I read written by former Finance Minister Paul Helyer, he states that is exactly what the Charter Banks have been allowed to do by governments. At one time the banks used to have a reserve, but the amount of that reserve has been allowed to go down to the point that it either doesn't exist at all anymore, or it is only a pittance of what would be needed if there was a run on the banks. The banks have virtually moved us to a virtually cashless society where paycheques often consist of nothing more that a piece of paper with virtual numbers on it. If everyone decided to withdrawn their supposed on-deposit funds from their banking institutions at the same time the whole system would come crashing down. Banks would have to close their doors or risk riots when the peole actually realized that these banks do not have most of this money to pay-out. This virtual money when deposited is virtually lent out numerous times in the form of mortgages, bank loans, lines of credit, and credit card debt. The reality is that these banks are making obscene profits on money that they do not actually possess, and our governments have allowed this to happen.

Do you know how to read a balance sheet? Do you know what a bank's assets are? Do you know what a bank's liabilities are? Do you know what reserves are?

[mirror]

I do.

There used to be a provision that the Cdn chartered banks had to keep 10% on reserve but I believe even that was ended some time ago.

There is a major rip off somewhere just don't remeber exactly where it is. I think Germany has or had a different kind of system of banking than we do but don't know all the details.

Why do we need chartered banks for anyway? Because the business community says so. When did they ever tell the truth? Why don't we do all our banking through the government?

I bet if the government hired a few sharp business people and said go out and compete with the chartered banks as we want to get rid of them and you have all the money you need to do it, the gov't could put them all out of business overnite.

Personal credit should be phased out, it is just a curse that is destroying people who now think they can pay off their debts by going to the casinos.

[Toro]

The Bank Act, on capital adequacy

PART X

ADEQUACY OF CAPITAL AND LIQUIDITY

Adequacy of capital and liquidity

485. (1) A bank shall, in relation to its operations, maintain

(a) adequate capital, and

(b adequate and appropriate forms of liquidity, and shall comply with any regulations in relation thereto.

(2) The Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by banks of adequate capital and adequate and appropriate forms of liquidity.

(3) Notwithstanding that a bank is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the bank

(a) to increase its capital; or

(b to provide additional liquidity in such forms and amounts as the Superintendent may require.

http://laws.justice.gc.ca/en/B-1.01/4283.html#rid-4372

The Office of the Superintendent of Financial Institutions overseas deposit taking institutions (DTI), i.e. banks, in Canada. From OSFI

As with the assets to capital multiple, the Superintendent may prescribe a risk-based capital ratio requirement for each DTI. Where a higher ratio has not been prescribed specifically, DTIs will be expected to meet a minimum ratio of 8.0%.

http://www.osfi-bsif.gc.ca/app/DocReposito...nes/car01_e.pdf

Canada is a member of the Bank of International Settlements. The Basel Committee of the BIS in 1988 set forth the reserves deemed adequate for institutions engaged in international banking. Reserves are to be 8% of total capital. Here's the exact wording

III. A target standard ratio

44. In the light of consultations and preliminary testing of the framework, the Committee is agreed that a minimum standard should be set now which international banksgenerally will be expected to achieve. It is also agreed that this standard should be set at a level that is consistent with the objective of securing over time soundly-based and consistent capital ratios for all international banks. Accordingly, the Committee confirms that the target standard ratio of capital to weighted risk assets should be set at 8% (of which the core capital element will be at least 4%).

Here's the document

http://www.bis.org/publ/bcbsc111.pdf

And here's the link to the website

http://www.bis.org/publ/bcbsc111.htm

[Toro]

Why do we need chartered banks for anyway?  Because the business community says so.

No, because a functioning economy needs an efficient and healthy financial system. Without it, Canada would be much poorer. You can argue about which system is better - the American or the Canadian system - if that's what you mean by "chartered banks". There are about 8,000 banks in America. There are more deposit taking banks registered in my county than there are chartered banks in Canada. But that's a different argument. A modern economy needs an efficient conduit in which to channel capital between savers and borrowers.

When did they ever tell the truth? Why don't we do all our banking through the government?

Because that would be a disaster. Government controlled banks around the world continuously get involved in political projects to boost the politicians own prestige, and the resulting graft and corruption that surely follows. Banks are highly levered institutions and a handful of bad economic decisions can wipe out a bank's capital. Giving politicians and principals that aren't responsive to market signals increases the risk to the banks, which is the lynchpin in the entire financial system.

I bet if the government hired a few sharp business people and said go out and compete with the chartered banks as we want to get rid of them and you have all the money you need to do it, the gov't could put them all out of business overnite.

I'd take that bet. Banking and "business" are two very different businesses with far different risk characteristics.

Personal credit should be phased out, it is just a curse that is destroying people who now think they can pay off their debts by going to the casinos.

You would collapse the economy if you did. There's a legitimate argument about what's the appropriate level of consumer installment debt, and the level of debt worries me. But the freeing of capital to the middle and lower classes over the past 100 years has been one of the greatest "democratic" developments in finance over the past century. One of the biggest arguments used against the banks a long time ago was that it didn't supply credit to anyone who wasn't wealthy. It used to be that only the rich could borrow from the banks. Now, virtually anyone can get credit. The argument that its "destroying people" is a fallacious one as about 2% of consumer debt is written off every year. The highest level of debt write-off was in the early 90s at around 5-6%. So this belief that people are being hurt by too much credit is simply false.

[Guest eureka]

It was Governmanr involvement in Banks and Banking involvement in Government that inspired Germany's rapid industrialization in the nineteenth century.

[Toro]

Germany didn't industrialize because the government owned and operated all the banks because all banking wasn't done through the goverment. Private banking in Germany has been around for centuries.

There's a difference between government "involvement" and "doing all our banking through the government" as mirror suggested. I'm all for government "involvement." Government involvement in the financial system has been a boon because laws have been enacted to increase the strength and soundness of the system, which has mitigated the cycles of the economy. But government ownership of the entire banking system is a very, very bad idea.

And regarding this lawsuit, if these plaintiffs - who know nothing about finance - won, I would take every single dime of mine and my family's savings out of Canada and recommend to the institution I work for to sell every last Canadian bond. So to those who are following this lawsuit and hoping for a victory by the plaintiffs, please keep posting the developments here. It would be much appreciated.

[B. Max]

This sounds like the free money crowd. If the government ever got the keys to the front door of the banks it would make the cost of adscam and the rest of their scandals look like chump change.

There is a couple of things they can do however. Make the banks decide how they want to make their money. Either they make it on interest on money they loan, or on service fees, but not both. As it used to be. Next they need to allow more banks into the country for more competition.

[Toro]

The reason why fees and interest exist is because it separates the costs of business and allocates those costs to their appropriate lines of business. Banks used to have no fees because the costs of going to the teller and putting your money into an account, which was free, cost the bank money. That money had been made up overcharging interest on its loans. However, as capital markets have moved away from raising capital primarily from the banks, lending has become a much more competitive and cutthroat business. To compete, the banks had to lower interest rates to be more competitive and allocate costs more efficiently. Thus, fees went up. And, to be fair, banks often prefer a fee-based business because its more consistent and less risky than the spread business of borrowing at a lower interest rate and lending at a higher interest rate.

[B. Max]

The reason why fees and interest exist is because it separates the costs of business and allocates those costs to their appropriate lines of business.  Banks used to have no fees because the costs of going to the teller and putting your money into an account, which was free, cost the bank money. That money had been made up overcharging interest on its loans.  However, as capital markets have moved away from raising capital primarily from the banks, lending has become a much more competitive and cutthroat business.  To compete, the banks had to lower interest rates to be more competitive and allocate costs more efficiently.  Thus, fees went up.  And, to be fair, banks often prefer a fee-based business because its more consistent and less risky than the spread business of borrowing at a lower interest rate and lending at a higher interest rate.

<{POST_SNAPBACK}>

The bank i deal with now has no fees. It is automated. I became sick and tired of being ripped off with banking fees.

I went into the TD one day about mid month and asked for an up to date transaction record of an account. She said ok, but that will be five dollars. I said no it won't. She said it costs five dollars or you're not going to see it. I said how much does it cost to close it. Nothing she said. It took a few seconds for it to register on her, and she walked over punched a couple of buttons and said her you go.

[August1991]

Getting back to the thread's original topic, I at first thought John Ruiz Dempsey was a fictional character. Apparently, he's not. But he is certainly not a lawyer.

The Law Society of British Columbia wants to make it clear to legal consumers that John Ruiz Dempsey is not a lawyer.

"He is not a lawyer. He is not a member of the Law Society of B.C.," said Brad Daisley, public affairs officer for the society. He said Dempsey should not be representing himself as a lawyer, nor should he be taking fees for legal services. Such actions are prohibited by the Legal Profession Act.

Abbotsford Times

Somebody is obviously pasting these notices all over the Internet. God knows why.

Weird.

[Toro]

[mirror]

A brief history lesson.

BANK OF CANADA

That amounts to a an effective gift to the banks of some to 8 billion each year, depending o­n how high the BoC sets the benchmark interest rate. And interest rates are about to begin climbing o­nce more, and consumer debt is at record heights across the nation.