Bank bail-ins: The legislation putting your retirement savings in danger

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Bank Bail-ins: The Legislation Putting Your Retirement Savings in Danger

The final cascade in the inflation continuum is an economy hitting recession. The banking system is often the worst hit in such periods. In 2007-2008 during the great recession, financial institutions hit rock bottom, leaving them needing government intervention to escape murky waters.

Injecting over $700 million in rescuing banks too “big to fail” meant a lot of tax-payers money was deployed in one of the biggest institutional bail-outs in American history. The widespread public displeasure at this act led to the creation of new legislation – The Dodd-Frank Act – which eliminated the use of tax payer’s money for bail-outs in future economic downtimes.

With this Act came the option of “Bail-ins,” which give banks the power to use resources within their coffers to rescue themselves from potential crashes.

Dodd-Frank Act and How Bail-ins Work

With the Dodd-Frank’s legislation, financial institutions can use your funds legally to keep themselves afloat. An example of such was when Cyprus instituted a bail-in policy that forced depositors with more than 100 000 euros to write off a portion of their deposits.

Assets and holdings with banks in excess of the Federal Insurance Deposit Commission (FDIC) limits are at risk of being coveted by banks in financial turmoil.

As the onus of keeping a bank afloat rests now with its unsecured creditors, debtholders and bondholders, any investment in a financial holding is at risk of being used by a bank to stay solvent.

How Can You Protect Your Assets from Bail-ins?

1. Diversify

With policies such as Dodd-Frank the astute investor needs to diversify their portfolio to avoid their retirement plans being held up at the whims of ailing financial institutions. Diversify your savings into precious metal IRAs, Real estate, Bonds and Equities.

2. Minimize amount of holding in bank

The Dodd-frank legislation gives banks the legal power to use money from accounts in excess of $250 000. Ensure you hold fewer than that amount in a single account and spread your money across different banks.

3. Monitor financial stability of your institution

Bail-ins came as a result of needing to stay afloat. Keep a tab on your financial institution and the financial markets at large so as to be able to make decisions to protect your retirement savings and avoid being prey to legislations such as Dodd Frank.

4. Avoid banks with volatile investments

In times of great economic volatility, financial institutions with volatile investments are often at risk of failure. Institutions who bought into the housing bubble were worst hit during the great recession. Ensuring your institutions are firmly hedged against inflation through investments in commodities like gold is a great way of avoiding this legislation.

Invest in Precious Metals IRAs

Since the pandemic bubble burst, America has been on the edge of another recession with the most recent crisis hitting the housing markets. There is a need to keep your savings and investments hedged against inflation.

Investing in physical precious metal IRA helps secure your money safely from unsuspecting legislation that empowers institutions to bail-in. Your assets are safely secured using time-tested commodities such as gold and silver.

Also choosing financial institutions who have a portion of their holdings in precious metal IRAs is something you should watch out for when choosing an institution.

Conclusion

Bail-ins are the legal and unsuspecting way for innocent depositors to pay for the risk and failings of financial institutions. A lot of Americans are unaware that this legislation exists and that they are at risk of falling prey to such legislation.

It is important to keep a tab of the financial market and to choose protective and wise investments such as precious metal IRAs to safely secure your savings.

A precious metal IRA is a sure way of keeping your assets safe and secured.

We are committed leaders in the precious metal industry and our brand thrives on trustworthiness. To begin the journey to safeguarding your retirement reach out to us at 888-503-1553 or click here and get your FREE Guide for Investing in Precious Metals.