Spanish Bank Deposits Seized, Cyprus-Style!

• Spanish Bank Deposits Seized, Cyprus-Style! 
  by http://larouchepac.com/ 
  Eurogroup President Joeron Dijsselbloem caused both a political furor and rumblings of major bank runs across Europe, with his remarks March 25 that the great bank heist in Cyprus was actually a “template” for other European countries. The influential Eurogroup Working Group quickly drafted an internal memo which denied Cyprus was such a “template,” the Wall Street Journal reports today. And Spanish Prime Minister Mariano Rajoy held a joint press conference yesterday with French President Francois Hollande, to proclaim that “the problem of the Cypriot banking sector is different [than that of the rest of Europe]; the decision adopted is extraordinary and unique, and will be applied in an extraordinary manner and only to Cyprus.”
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  But even as Rajoy was speaking, his government was announcing a long-awaited final settlement of the cases of five bankrupt Spanish banks, led by the giant Bankia, which involved fleecing up to a million small depositors in those banks of anywhere from 30% to 70% of their holdings — something over 6 billion euros. Although the mechanism employed is slightly different than that in Cyprus, the policy is identical: the international financial system is in full meltdown; the game is over; and small depositors and the population in general are being forced to take the hit in order to bail out the big international speculators.
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  The only alternative to such genocidal robbery, Lyndon LaRouche has repeatedly explained, is the international implementation of full banking separation under Glass-Steagall legislation.
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  In the case of Spain’s Bankia, the thievery involves the fact that, over recent years, the bank fraudulently tricked over 400,000 small depositors to use their savings to purchase the bank’s “preferred shares” — or “preferentes,” as they are known in Spain — with promises of very high rates of return. Marketed as fixed-term deposits, the reality of the “preferentes” is that they either could never be cashed in, or carried terms as long as 1,000 years!
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  With Bankia bankrupt, the FROB (Spain’s bank reorganization agency) has imposed “haircuts” of 39-50% on all “preferentes” holders, followed by their forced conversion into common stock in Bankia. As part of the settlement, those common stocks, which last week were trading at 2 euros per share, will be drastically slashed down to 1 euro cent per share—a 99% loss. The head of Spain’s ADICAE (Association of Consumers and Users of Banks, Savings Banks and Insurance Companies), Manuel Pardos, has denounced this arrangement as “double thievery and fraud,” and has filed suit against most of Spain’s major financial institutions for the “crime of massive consumer fraud.”
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  In addition to Bankia, four other bankrupt financial institutions are involved in the heist: Catalunya Bank is slashing “preferentes” by 61%, Banco Gallego by 50%, Novagalicia Banco by 43%, and Banco de Valencia by 90%. In all five cases, the Wall Street Journal admits, “most” of the “preferentes” holders are small depositors.
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  Three additional features of the robbery should be noted.
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  1) The drastic “haircut” of defrauded small depositors was imposed on the Spanish government as part of a July 2012 Memorandum of Understanding with the detested Troika — the same criminals who just authored the great bank heist in Cyprus.
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  2) While Prime Minister Rajoy was busy impersonating Pinnochio, his Deputy Economics Minister, Fernando Jimenez Latorre, was assuring Spain’s Senate that the deal “was as generous as possible, because it converts holders of those products [the ‘preferentes’] into stock holders, and that lightens their load to help clean up the institution. It is satisfactory, if you compare it to other cases which happened within the EU.”
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  3) The “preferentes” scam in Spain is almost identical to the late 1930s looting of consumers carried out by First National City Bank (today Citibank), whose exposure by chief counsel Ferdinand Pecora in the famous 1933 congressional hearings led to the passage of Franklin Roosevelt’s Glass-Steagall law that year.

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